Question

When would it pay a seller to use group price discrimination AND nonlinear price discrimination at the same time? Give me 3 real-life examples. Include in your answer the definitions of group price and nonlinear discriminations. Include as much information as possible to answer the question.

Answer 1

Price discrimination is a selling strategy that charges customers different prices for the same product or service based on what the seller thinks they can get the customer to agree to. In pure price discrimination, the seller charges each customer the maximum price he or she will pay. In more common forms of price discrimination, the seller places customers in groups based on certain attributes and charges each group a different price.

• With price discrimination, a seller charges customers a different fee for the same product or service.

examples ;-

Travel agency - Airlines and other travel companies use differentiated pricing regularly, as they sell travel products and services simultaneously to different market segments. This is often done by assigning capacity to various booking classes, which sell for different prices and which may be linked to fare restrictions.

Coupons;- The use of coupons in retail is an attempt to differentiate customers by their reserve price. The assumption is that people who go through the trouble of collecting coupons have higher price sensitivity than those who do no

Retail benefits;- A variety of incentive techniques may be used to increase market share or revenues at the retail level. These include discount coupons, rebates, bulk and quantity pricing, seasonal discounts, and frequent buyer discounts.

DEFINITION :

Group Pricing

are the collection of customers with some common characteristics. The idea behind group pricingTo establish different prices for different groups or customer segments. is to establish different prices for different groups or customer segments.

Non linear ;- Second-degree price discrimination, or nonlinear pricing, involves setting pricessubject to the amount bought, in an attempt to capture part of the consumer surplus. ... A bulk sale strategy, such as quantity discounts, will be applied and consumers will choose the block that better suits them