Question
I will give three examples of price discrimination. Please identify the kind (first, second, or third degree) of price discrimination it represents and explain your
I will give three examples of price discrimination. Please identify the kind (first, second, or third degree) of price discrimination it represents and explain your answer.
1. You take an off-season vacation at a Vermont ski resort and they offer you a deal. If you agree to stay in a condo three nights at the regular off-season price, you can stay in your condo fourth day at half-price.
2. You are at a car dealership and they have a large number of a certain popular model in the lot. You observe a lot of customers agreeing to buy the cars, but you also notice that each customer is paying a different price after meeting with members of the sales force. Some customers hold out and get a relatively low price while others might not haggle at all or they give a weak effort to get a lower price.
3. Southwest Airlines sells Anytime tickets to regular customers and sells the same tickets to Seniors (age 65 and older) but at a steep discount. (On an upcoming round trip flight from Baltimore to Sacramento, the Anytime ticket is $595 each way while the Senior ticket is $374 each way. Tickets are not transferable.)
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