Price Discrimination

Price Discrimination

In Price Discrimination, similar goods or services are sold at different-different prices to different-different customers or markets by the same shopkeeper or provider. In pure price discrimination, shopkeeper charges the customer the maximum price he or she can pay. In more common forms of price discrimination, the shopkeeper places customers in groups based on some attributes and according to that shopkeeper charges those groups.

Types of Price Discrimination

1.    Perfect Price Discrimination:

In the perfect price discrimination, seller charges different prices to different customers for same product. Eg. - Auctions
For Example :- In school or colleges, Principle charges different fees for the same program as some belong to SC/ST, some belong to general, some belong to Army kota.

2.  Market Based Price Discrimination:

In the market based price discrimination, monopolist charges different prices in different markets. Eg. – Age based discount, social/economic reservations
For Example :- Suppose if a price of an apple in Karnataka’s market is Rs.20 and in Rajasthan's market is Rs.30. Here the product is same, but prices are different as it depends on market.

3.  Price Discrimination by Self Selection:

When different price charge for consumption of the different quantity of goods is called as price discrimination by self selection.
For Example :- Suppose if two persons wants to order the same product through Paytm. When one person orders the product, a coupon is available for him, by applying that coupon, he gets cashback. But when other person orders the same product, there is no coupon available for him. Here product is same, but prices are different because the 1^st person gets the cashback.