Question

In 100 words One method of price discrimination for firms is the use of coupons and rebates. Firms are basically allowing consumers to self-identify their respective price elasticities of demand for a product. Describe the last time you used a coupon or a rebate, and another time where you knew a coupon might be available and yet chose to not bother with it. Make sure to explain how the opportunity cost of your time and effort played a part in the choice you made. Do you think price discrimination through coupons is fair? Should there be laws against this behavior? Why or why not?Please type answer in detail

Answer 1

price discrimination is the practice of charging different prices from different consumers for the same product. there are different types of price discrimination based on the objective to discriminate.

sometimes, different prices are charged from different consumers based on their age. for example in railways,airlines. senior citizens are usually given discount on tickets.

coupons and rebates are also given based on the purchasing capacity. for example on the shopping of 50 dollors , shops can give a coupon of 10% on next shopping.in today's world,so many firms use good pricing strategies to attract customers. the last time one could have got on restaurants where it had completed 3 years and gave 15% discount on next visit. and one could have got it on christmas eve where on the purchase of 70 dollors a rebate of 10% was given. as we know opportunity cost is the next best alternative. but it is hardly observed that one has spent so much of time in deciding weather the offer would be profitable or not. for example in case of above mentioned bulk discount if one has money and has requirements of products in bulk then he/she can definitely go for such a discount but if one does not require large quantity and variety then spending for getting discount will not be profitable.

price discrimination is not illegal until and unless it is lessening the competition. moreover, price discrimination should not be based on caste,religion,cultural background. however in case of creating awareness price discrimination in not illegal but if a firms is giving benefits secretly to some special group it is illegal.in case of coupons and rebates,terms and conditions should be specified to all customers clearly if they are eligible and qualify the criteria, they can avail those coupons and rebates.

yes, there should be some rules and regulations so that firms are bound to perform fair practice. for example in some countries there are competition commission to check the fair practice in the market. based on the laws and regulations a consumer who is exploited can file complaint against the firm which is illegally charging different price.

if there is no law and regulations,firms will be free to do such a things without fear and it will create imbalance in the market.