Question

Consider each of the following examples of price discrimination. For each case, explain how price discrimination works. Also, explain which consumers would be worse off and which consumers would be better off if the firm were unable to price discriminate in this way.

1. Seniors pay lower prices for theatre tickets than do other adults.

2. Consumers pay less for paperback books than for hardcover books, but must wait six to twelve months before the paperbacks are made available.

3. Customers at garage sales often pay a lower price if they ask for one that is if they reveal that they are prepared to haggle.

4. Airline customers get a discount fare if they are prepared to stay over a Saturday night at their destination