MGCR 293 Lecture Notes - Lecture 16: Price Discrimination, Marginal Cost, Economic Surplus

• School: McGill University
• Department: Management Core
• Course: MGCR 293
• Professor: Kamal Salmasi

Document Summary

Different demand segments must have different price elasticities of demand. Managers must be able to identify and segregate the different segments. Markets must be successfully sealed so that customers in one segment cannot transfer the goods to another segment. Coupons and rebates are used to segment a market: people who use coupons or send in rebates are likely to have more elastic demand than those who do not. Coupons and rebates lead people to self-select their market segment. Coupons and rebate programs allow firms to price discriminate. Less expensive: notice, stay over the weekend, no refund. Demand for some products may peak at particular times: rush hour traffic, electricity- late summer afternoons, ski resorts on weekends. Peak load pricing is a policy of raising prices when the demand for a service is at its highest. Mr is not equal for each market because one market does not impact the other market. Increased mr and mc would indicate a higher price.