Price discrimination

Question 1

What is price discrimination also known as

Answer 1

dynamic pricing

Question 2

How many kinds of dynamic pricing are there

Answer 2

3 degrees

Question 3

1st degree

Answer 3

market haggling

Question 4

2nd degree

Answer 4

bulk discounts

Question 5

3rd degree

Answer 5

separate consumer groups

Question 6

What is crucial for 3rd degree price discrimination

Answer 6

the coeff. of elasticity of demand

Question 7

What is peak and off peak pricing an example for?

Answer 7

inter-temporal price discrimination

Question 8

How does price discrimination improve economic welfare?

Answer 8

cross subsidy - expensive drugs in the West/ cheaper in develop. countries
better use of spare capacity - environmental benefits
brings new consumers in the market
profits can be used for innovation

Question 9

Evaluating price discrimination

Answer 9

Bulk of people pay higher prices - alloc. inefficient
extraction of consumer surplus turned into profit
reinforces monopoly power

Question 10

Conditions for price discrimination

Answer 10

Firm must already have monopoly power
Indentifying market segments - diff elasticities
Ability to separate groups
Ability to prevent re-sale

Question 11

What is the technical term for personalised pricing?

Answer 11

Hyper Targeting