Direct Price Discrimination Flashcards
The motivation for price discrimination is it allows
a firm to sell items to low-value customers if price is too high
Price discrimination is the practice of
charging different prices to different groups of buyers
In a direct price discrimination scheme we can identify
members of lower-priced goods to the higher-value group
Indirect price discrimination we cannot identify
the two groups or cannot prevent arbitrage.
The Robinson-Patman Act is part of a group of laws
collectively called antitrust laws governing competition in the US
Charge all customers the same price, unless
the cost of them varies
Arbitrage can defeat price discrimination schemes
if enough purchases at low prices are resold to high value consumers
It can be illegal for a business to price discriminate when selling goods to other businesses unless
price discounts are justified or offered to meet competitor prices
Price discrimination schemes may outrage
customers who know they are paying more
