Economic Assignment | Price discrimination
Added on 2020-05-16
6 Pages767 Words48 Views
Running Head: ECONOMIC ASSIGNMENTEconomic AssignmentName of the StudentName of the UniversityAuthor note
ECONOMIC ASSIGNMENT1Table of ContentsPrice discrimination through coupons.............................................................................................2References and Bibliography...........................................................................................................5
ECONOMIC ASSIGNMENT2Price discrimination through coupons Sellers engage in price discrimination to maximize surplus. Offering discount or couponsis one effective means of price discrimination. With the use of coupons buyers are distinguishedin terms of their reserve price (Baumol and Blinder). Customer having a highly elastic demandusually spend a lot of time to find coupons, which lowers the price of their desired goodseffectively. In contrast, buyers having not so much price sensitive demand does not invest muchtime to find coupons. It is a form of third degree price discrimination where market is segmentedaccording to reserve price of the customers. Figure 1: Third degree price discrimination (Source: as created by Author)There is nothing unfair or illegal in this form of price discrimination. Discrimination isonly illegal when discrimination is made on the basis of religion, race, nationality or gender. It is
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