Question

Give two examples of where you have seen price discrimination and explain why they are examples.

Answer 1

Price discrimination refers to the different prices charged by the firms or sellers for different types of individuals in the market.

Two examples where you can see the price discrimination are as follows:

1. Discount programs - Discounts programs such as loyalty programs, discount coupons, etc. run by the firms or sellers are the example of price discrimination. Example - Amazon an e-commerce company, gives special discounts for its prime member customers, so here the price of the product varies according to the type of customers. Prime customers get the same product at a lower price as compared to the price charged to the non-prime member.

2. Airlines tickets - In airline industries or firms, different prices are charged to the consumers or individuals according to the demand for the flight tickets. Example - When the demand for the tickets is high, then the high price is charged by the airlines, but when the demand is low, then a low price is charged for the same destination.