Can You Differentiate The Degrees Of Price Discrimination By Giving Examples From Your Practical Life?

Question

Can You Differentiate The Degrees Of Price Discrimination By Giving Examples From Your Practical Life?

3 Answers

Answer Question

Answer 1

Price discrimination occurs when the different customers are charged different prices for the same product. First degree price discrimination is when a different price is charged to all the customers. This is quite often the case with the sale of old cars and second and goods where each customer bargains with the seller for the car and the purpose of the seller are to get the maximum possible price. Second degree price discrimination occurs related to quantity where the people who buy more pay a lesser price. Wholesalers are an example for this where they often give discounts to customers who purchase in bulk. Third degree price discrimination occurs when the consumer market is divided into various segments and a price is charged to each segment that will result in most sales. An example of this is in transportation like airlines that charge different prices to the infants, adults, students and corporate customers.

Answer 2

There are three degrees of price discrimination. First degree price discrimination occurs when sellers charge totally different prices to all of their individual customers e.g in the second hand selling of car, each customer is willing to pay different price to the seller. The place where bargaining come into effect gives rise to first degree price discrimination.

Second degree price discrimination occurs when companies charge low prices to the bulk quantities. The real life example is whole salers. If you buy something in bulk, you can get discount which comes in the second degree price discrimination.

Third degree price discrimination occurs when different prices are charged to different groups or segments such as senior citizens, students usually get discounts in transportation, restaurants and sometimes in retail stores.

Answer 3

There are three degrees of price discrimination. The first degree of price discrimination suggests that the firm charges each consumers their reservation price for the products and goods. For example, the markets where consumers bids for tenders follow first degree of price discrimination. The second degree of price discrimination suggests that the firm charges "blocks" of customers their reservation prices. For example, when sales to industrial customers are made then it is known as second degree of price discrimination. The third degree of price discrimination divides the customers into two or more sub-markets and profits are independently maximized. For example differentiation of student or senior "discounts" like a student or a senior consumer will have a different willingness to pay than an average consumer because of the budget constraints and to make it affordable different target markets are separately identified.