Question

Give an example of price discrimination from your own experience. Is this an example of perfect price discrimination, group price discrimination, or nonlinear price discrimination?

Answer 1

Price dicrimination is a pricing strategy where identical or largely similar goods or services are transacted at different prices by the same provider in different markets.

From my personal experience, i have noticed a price discrimination in bus tickets. The prices of the bus tickets differ between children and adults.

A car salesman who tries to asses each consumer's maximum willingness to pay and charges accordingly is an example of perfect price discrimination. Auctions is also an example of perfect price discrimination.

When a seller places customers in groups based on certain attributes and charges each group differently it is called group price discrimination. Charging different prices from different age groups is an example of group price discrimination.

When more units are sold at a lower per-unit price, including quantity discounts, it is called nonlinear price discrimination. For example, when a consumer pays different prices for different blocks of a prduct such as gas, electricity, internet, etc. it is called nonlinear price discrimination.