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Price Discrimination In The Airline Industry: A Case Study

716 Words3 Pages

Price discrimination can be observed in many industries it involves charging different prices to various groups of consumers for the same items of products. It can be seen and well known that the airline industry in every country has been practicing the price discrimination for many years and other industries try to practice in the same way. In the essay will examine by using economic theory to explain the definition and importance of price discrimination, the various kinds of price discrimination and more concern about the details in the third degree of price discrimination. However, This essay will answer why the local stores are operated by national supermarket chains charge the customers a higher price than outside the town and larger stores while the writer 's view and conclusion will be drawn. According to Pigou(1920),Price discrimination is generally defined as charging a sigle price for a product or service despite the fact that the costs of supply are different for different customers while Tejvan (2014) supports that the price discrimination is referred to charge different prices to different consumers for the same good and charging at the different price it depends on several criteria such as the quantity bought, time of use, age profile and when unit is bought. In respect of importance, we can separate in two sides. Firstly in the groups of consumers, some of them can get the benefits from the price discrimination while some consumers cannot. Secondly, the business will gain more profits when use this into their firm. …show more content…

For example in the overseas markets, the exporters can charge a higher price when demand is estimated to be more inelastic than general markets. In the peak market the firm will produce where MRa = MC and charge price Pa, and in the off-peak market the firm will produce where MRb = MC and charge price Pb. Consumers with an inelastic demand will pay a higher price (Pa) than those with an elastic demand who will be charged Pb. However, In respect of Internet and e-commerce in price discrimination. Nowadays, The rapid expansion of e-commerce using the internet has been giving manufacturers and opportunities to experiment with different types of price discrimination. Owing to the people like to live in convenience and easy life. At the present, online market is really popular to sell and buy the product. The Consumers on the internet provide suppliers with a huge amount of information about themselves and their buying habits that then give sellers deal for discriminatory

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