Question

Briefly discuss the challenges associated with price discrimination. Could it be viewed as a socially "good" thing from the consumer's viewpoint?

Answer 1

Price discrimination, talking about the word, itself contains the word discrimination, which is not at all socially justiciable, price discimination is an business tactic by which a good or a service is sold at differential price levels, some people use to pay more, some less thus it actually hide the actual value of that good or services, it brings intranceparency in the business module, it triggers predatory pricing mechanisms, firms in order to gain profits, use different social conditions. For Eg:- Uber, the biggest cab service in the world, are charging high fares during festivals, evening hours etc on the name of peak hours, high demand etc. It benefits from the constraints or helplessness of the people.

Some of the other problems with price discrimination is that it has greater administrative costs, market unstability, volatility, unpredictable market, etc. It also increases inequality in the society because the people or the persons who were charged high because of this variable pricing method may be unemployed, may be a poor, may be economically unstable or anything.