Per (Twin, 2024) Charging different prices to different consumers for the same product to maximise revenue for sellers by exploiting elasticities of consumers: higher prices for inelastic consumers, lower prices for elastic consumers.
Three types:
First degree price discrimination: when a company charges the maximum price per unit consumed (eg.: auctions or client service companies)
Second degree price discrimination: when a company charges a different price for different quantities consumed (eg.: bulk discounts)
Third degree price discrimination: when a company charges a different price to a different group of consumers (eg.: students/adults/children/retiree)
Markets in which consumers are charged different amounts must be kept separate (by time, physical distance, or nature of use) otherwise a consumer could buy low, and sell high.
Work Cited:
Twin, Alexandra. “Price Discrimination.” Investopedia, 27 June 2024, www.investopedia.com/terms/p/price_discrimination.asp.
