Question

Price discrimination is a pricing strategy where different groups of consumers are charged different amounts for the same good. This is further divided into direct and indirect categories with direct price discrimination charging different prices to different groups of consumers such as adults vs children or students vs non students and indirect discrimination charging different prices based on features that consumers are willing to pay for such as a cruise ship ticket that offers interior, exterior or balcony cabins. Direct price discrimination would be more advantageous with products that are marketed to varying groups or geographic areas. Pharmaceutical companies often use direct price discrimination to charge different prices to different countries with America being the highest. They then pursue legislation to prevent Americans from importing medication from lower paying countries If a product is not marketed to a diverse group then direct price discrimination may not be the best strategy. In these situations, it is still possible that indirect price discrimination could be a good strategy. This works best for products with a variety of options or features that consumers are willing to pay for. An example of this can be seen in the selling of automobiles. The price will change based on the different features that a consumer selects.    

Please respond in 100-150 words

Answer 1

Yes Price discrimination can be done in direct and indirect ways.

In direct price discrimination the prices vary from group to group of people or area wise or region wise or state wise etc. Mostly we can see price discrimination for goods which are sold to consumer for their day to days basis.

Ex: A seller will sell dozen apple at a cost of 5$ in New York and the same dozen apple may be 4$ in California. Here we can see that their price discrimination which is direct where price is varied from place to place. This is called as direct price discrimination.

Indirect price discrimination is one where it depends on what price the people are willing pay. Indirect price discrimination will can be seen in many industries

Ex: Flight tickets cost will be high during weekends and any holiday where as it will low if we book the ticket some months back.

It is one form of indirect discrimination.

Not every time we can use indirect and direct price discrimination it depends on the good and services. It depends on the demand and supply of good in the market. It depends geographic , consumer behaviour and many other factors. So depending on that price discrimination strategy is taken.

We cant take a indirect price discrimination strategy where a direct price discrimination strategy is applied as it will bring losses.