Price discrimination is a pricing strategy where same product is sold at various prices in different markets. In practice, a single customer may be charged different prices for different units of a good what are different customers may be charged different prices for the same product or service.
Now let us look at the types of price discrimination. So basically there are three types of price discrimination.
1. Perfect Price Discrimination
2. Market based Price Discrimination
3. Price discrimination by Self Selection
Perfect Price Discrimination occurs when a company charges the maximum possible price for goods. It requires a Monopoly market. Here, every single unit of the same product is priced differently and attract maximum revenue from it.
In Market Based Price Discrimination price varies according to quantity demanded. In this case both buyer or seller share the customer surplus. For example: bulk discounts are given to wholesalers tour operators etc. This is a kind of market based price discrimination.
Price Discrimination by Self-Selection is a pricing strategy based on consumer groups. This occurs when a supplier charges different prices from different customer groups. For example: Seasonal Discounts, Incentive Discounts all come under this pricing strategy.
Now let us look at the types of price discrimination. So basically there are three types of price discrimination.
1. Perfect Price Discrimination
2. Market based Price Discrimination
3. Price discrimination by Self Selection
Perfect Price Discrimination occurs when a company charges the maximum possible price for goods. It requires a Monopoly market. Here, every single unit of the same product is priced differently and attract maximum revenue from it.
In Market Based Price Discrimination price varies according to quantity demanded. In this case both buyer or seller share the customer surplus. For example: bulk discounts are given to wholesalers tour operators etc. This is a kind of market based price discrimination.
Price Discrimination by Self-Selection is a pricing strategy based on consumer groups. This occurs when a supplier charges different prices from different customer groups. For example: Seasonal Discounts, Incentive Discounts all come under this pricing strategy.
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