Under certain conditions, firms can charge different prices to different customers for the same good or service without the price difference being due to differences in the costs of production.

So, instead of charging the same price to all buyers (e.g. $12 per cinema ticket), a seller may charge a higher price to adults (e.g. $14) and a lower price to students (e.g. $9). Firms engage in price discrimination because it allows them to increase their profits.

Besides the firm that earns higher profits, who else gains from price discrimination? Who loses?

Have you ever benefitted or lost from firms that engage in price discrimination?

Is it ethical for businesses to engage in price discrimination?