Unknowingly the
concept of price discrimination had already hit me. Lets see how
My friend and I took admission for PGDM course in a college in
Bangalore. We both took the admission in the same time. But my friend is always
in a hurry for everything. So just as the date of joining got confirmed he did
not wait for a single moment to book the flight ticket. But I thought I would
book later. Days went by and suddenly I remembered that I did not book the
flight tickets and only 20 days are left. So I booked the ticket quickly. My
friend and I booked the same flight for the same economy class but the
difference is that I was charged Rs. 10,000 and he was charged Rs. 4000. I was
shocked.
How????
Thanks to economics. It has got the answer. Its just the
concept of first and third degree of price discrimination.
First degree states that company will charge the maximum price the
consumer is willing to pay. See here. Since I have to join my college in time
my demand was purely inelastic and
so I would pay whatever the price would be and the company just used this.
Third degree states that company will change the prices depending on
different market segments which includes time of use. Here in my case if I had
booked my ticket earlier I would have got in a lower price but the time when I booked made my demand
inelastic which the air company took the advantage of.
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