1

Hertz and other car rental companies charge much more to rent luxury cars such as Ferraris and Bentleys than to rent compact cars such as the Toyota Yaris or Chevrolet Sonic. Is this price discrimination? Explain.

2.

As described in the Mini-Case "Google Uses Bidding for Ads to Price Discriminate," Google uses auctions to charge advertisers according to how much they are willing to pay to reach a target audience. What type of price discrimination is this?

319 Mini-Case Google Uses Bidding for Ads to Price Discriminate The ads that appear next to your Google search results depend on the terms in your search. That is, Google allows advertisers to contextual/y target people who search for particular phrases (Goldfarb, 2014). By making searches easy and fast with targeted ads, Google helps advertisers reach hard-to-find potential customers. For example, a lawyer specializing in toxic mold lawsuits can place an ad that appears only when someone searches for \"toxic mold lawyer.\" Google uses auctions to price ads. Advertisers place higher bids for the first listing on Google's search page. Goldfarb and Tucker (201 1) found that the amount lawyers are willing to pay for context-based ads depends on the difficulty of making a match. The fewer the number of self-identified potential customers (the fewer people searching for a particular topic), the more lawyers are willing to pay per search request to advertise. They also found that lawyers bid more when other methods of reaching potential clients are limited. Some states have antiambulance-chaser regulations, which prohibit personal injury lawyers from directly contacting potential clients by snail mail, phone, or e-mail for a few months after an accident. Search engine advertising prices per click are 5%7% higher in those states than in others. By taking advantage of advertisers' desire to reach small, targeted segments of the 319 search. That is, Google allows advertisers to contextual/y target people who search for particular phrases (Goldfarb, 2014). By making searches easy and fast with targeted ads, Google helps advertisers reach hard-to-find potential customers. For example, a lawyer specializing in toxic mold lawsuits can place an ad that appears only when someone searches for \"toxic mold lawyer.\" Google uses auctions to price ads. Advertisers place higher bids for the first listing on Google's search page, Goldfarb and Tucker (201 1) found that the amount lawyers are willing to pay for contextbased ads depends on the difficulty of making a match. The fewer the number of self-identified potential customers (the fewer people searching for a particular topic), the more lawyers are willing to pay per search request to advertise. They also found that lawyers bid more when other methods of reaching potential clients are limited. Some states have anti-ambulance-chaser regulations, which prohibit personal injury lawyers from directly contacting potential clients by snail mail, phone, or e-mail for a few months after an accident. Search engine advertising prices per click are 5%7% higher in those states than in others. By taking advantage of advertisers' desire to reach small, targeted segments of the population and varying the price according to advertisers' willingness to pay using auctions, Google is achieving the equivalent of individual price discrimination