PRICE DISCRIMINATION
ABSTRACT
Price discrimination is the pricing of similar goods at different prices about different customers. This is based on a person’s location and different periods. These three types of price discrimination, namely, first degree, second degree and third-degree discrimination pricing. In the first degree, the pricing is set up at the maximum where the consumer can buy. The second degree is when the seller sells the product in variations and choice to his clients about time and the product in the market. The third pricing degree is based upon the group of people may be adults children and students or particular groups; it’s also known as direct pricing.
Price discrimination occurs where there is a high demand for a commodity, and the supply is low and vice versa; thus, pricing may defer from one supplier to the client. Geographical locations may tend to affect pricing as conveying a commodity from one area to another may lower or raise the product in the market (Chand, 2018). In this, a client near the source of a product may buy it at a lower cost compared to a client miles away from the production area this is brought about by transportation cost and selling tariffs. Market imperfections are the other factor that may affect pricing, in this, the seller in the market can know his customer thus able to price as customer do not migrate from one market to market hence one will price his goods at a high price in the urban as compared to the market in the ghetto even though the places may be at a stone throw away distance.
In conclusion, we get to agree that price discrimination is strategically in the market of different firms to identify customers preference, enhance a firms profit this by making prices differ from one customer to the other thus making maximum profit from a product and also to show class in different of people where you are offering a similar outcome with the same purpose but pricing it at a high price in the urban areas tend to make them feel superior as compared to people in rural setup.
References
Chand, S. (2018). Price discrimination-meaning, Types, Conditions and other information. Retrieved from http://www.yourarticlelibrary.com/economics/price-discrimination-meaning-types-conditions-and-other-information-economics/28860