Direct price discrimination
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Direct price discrimination refers to a process where an organization tries to set different prices on their goods/services for two groups (Rowe, 2019). An organization usually does this practice to increase its profits since when different prices are charged on the same goods, then the organization maximizes its sales and margin. To do this effectively, the organization needs to identify the two groups and know about their buying power. The elasticity between the two groups increases, the higher the chances the organization has to design a more profitable price discrimination model. Secondly is that indirect price discrimination involves the use of different strategies to identify the two groups before going ahead to do price discrimination.
Additionally, the organization needs to ensure that they have reliable methods of preventing arbitrage or resale of products sold at lower prices while doing price discrimination since this can negatively affect their profitability. Strategic games involve an organization using different strategies to beat the competition and become successful. Through these games, the organizations in the industry know how to respond to anything that their competitors are doing to overcome them. Nash equilibrium refers to a pair of strategies where each organization has strategies to respond to any situation ideally and remain competitive and thriving in the long run.
References
Rowe, F. (2019). Price Discrimination, Competition, and Confusion: Another Look at Robinson-Patman. The Yale Law Journal, 60(6), 929. doi: 10.2307/793572