Price Discrimination in Economics.

Price Discrimination

In economics price discrimination is the strategy adopted by the seller to charge different price for same commodity to the customers. The seller charges maximum price from the customers they are willing to pay for the commodity. The customers are grouped according to their purchasing power.

Let’s take example of indigo airlines where the price for ticket varies. The more the demand the more the price of a ticket. The price usually remains high in weekends compare to weekdays as many people prefer to travel in holidays. The price also remains high in time of occasions compare to normal days of the year.

Price discrimination can be broadly segmented into 3 categories.
1.Perfect Price discrimination.
 i. auctions.
2. Market/Segment based price discrimination.
i. Agro based discount.
ii. Social / Economic reservation.
3.Price discrimination by self-selection.
i. Coupon.
ii. Cash back.