Price Discrimination Experience, Essay Example

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Essay

I have experienced four main types of price discrimination in my life.

The first main one, as a college student, is the difference between instate and outstate tuition.  That is, while outstate students are required to pay roughly 30% higher for classes, instate students receive a “discount” on their tuition.

The second type of price discrimination I have experienced at the doctor’s office.  Because I hold a different type of insurance than others in the clinic, my insurance bills at a different rate.  This includes fees relating to the doctor’s appointment, medical diagnostic tests, and medical procedures.

The third type of price discrimination I have experienced is differing prices for concert tickets.  Although Ticketmaster typically charges “standard rates” for tickets ranging from concerts to sport events, individuals buy these tickets and then sell them for other prices (note: this may be illegal depending on respective state laws).

The fourth type of price discrimination I have experienced is use of “Group-on” coupons for use in restaurants and stores around town.  While restaurants and retailers have their “listed price”, Group-on’s business model is based on giving individuals a lower price in order to access new food and products- retailers hope customers will come back again and again.

Although these four examples all deal with price discrimination, their underlying strategy is different.  The typical description of price discrimination involves sellers that discriminate based on different price elasticity of demand.  This is arguably at work in examples three and four: People may be willing to pay less for food of which they don’t know the quality; same with concert tickets based on demand.  The first example is not necessarily based on different price elasticity (although that plays a role); the main reason is that states protect educational markets supported with public money.  The second example involving health insurance does not necessarily deal with differing elasticity since consumers do not pay (nor do they likely know) the price of certain medical services.

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