PRICE DISCRIMINATION

Price discrimination: -

                               It is a pricing strategy, if the same provider selling the same goods at different price un related to the cost of supply is called price discrimination.                                                There are three degrees in price discrimination

1                   .      Perfect price discrimination

2                   .     Price discrimination by self-selection

3                   .      Market/segment based price discrimination

Perfect price discrimination: 

                              The maximum price that consumer willing to pay is called reservation price, here the consumer surplus will be zero

   Example: 1. I buy the vintage car for 5 crores

Price discrimination by self-selection:

                              offer given in general, where everyone is eligible for that offer without any limitations is called price discrimination by self-selection

    Example: 1. De-mart gives minimum 6% discount for all products, so people are more attracted to De-mart

Market/segment based price discrimination: 

                              price fixation is based on group of customers

    Example: 1. Pay of fee in college is based on merit.

                    2. 10% discount in restaurants for IBA students