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The worst part about price discrimination is that if there are a limited number of players in the market, it feels like, and maybe effectively is, price fixing.
by opportune 7y ago
The worst part about price discrimination is that if there are a limited number of players in the market, it feels like, and maybe effectively is, price fixing.
Now, it may not play out as direct collusion, but if only one company engages in it, they won’t be competitive for their wealthier customers, so it doesn’t make much sense. But if both participants in a duopoly do it, you have no options. It wouldn’t be possible to enact price discrimination for something with lots of competition
- C14L 7y ago> they won’t be competitive for their wealthier customers Sure they will. You don't charge too much so that the customer will start feeling that its worth their time to look for alternative offers. That upper limit it usually higher the wealthier (or "spending happy") the customer is. So it totally makes sense to establish that limit individually per costomer.
- matz1 7y agoYes, the point is company can't just charge arbitrarily high price, they are still restricted by competition and the willingness of the individual to spend.
- deleted 7y ago[deleted]