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> But importantly, the bakery can't charge the poor people price for everyone or they'd bankrupt. In this situation the bakery is basically running a charity f
by nybble41 7y ago
> But importantly, the bakery can't charge the poor people price for everyone or they'd bankrupt.
In this situation the bakery is basically running a charity funded by the extra money they're getting through price discrimination. That's separate from their role as a business.
The minimum sustainable price in the absence of price discrimination would not be the "poor people price" or the price paid by the rich, but rather the cost of material, labor, and capital which lies somewhere in between. Price discrimination and the absence of arbitrage allow the bakery to charge rich customers more, but it's entirely their choice to use that extra income to provide goods at a loss to those of lesser means. They could instead just keep the extra revenue for themselves.