The Economics of Public Issues-Coffe Tear or Tuition Fee Outline

The Economics of Public Issues-Coffe Tear or Tuition Fee Outline

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Coffee, Tea, or Tuition Fee? Amazon.com is one example of many internet companies that practices price discrimation to increase profits. Price discrimination is illegal under some circumstances and seems like it would benefit the seller only but it also benefits the buyer. Three conditions for a firm to engage in price discrimination: firm must be able to raise marginal cost without losing customers to competition, must be significant difference between customer’s ability to pay, firm must prevent re-buying from ppl who pay less. Airline tickets were once federally regulated, after that stopped airlines started raising fare for business travelers and lowering for leisure travelers. They do this using computerized systems, statistical data and a database
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Unformatted text preview: of information from the past. . • Months ahead, a flight is monitored closely and prices adjusted based on who is buying tickets and when and competitor’s prices. • Prices are adjusted up until tickets are no longer being sold, at the end prices can vary from $200something for cheapest tickets to $1400 for most expensive tickets. • Schools do the same thing if you look at financial aid as a way of charging people different tuition. • Schools mainly look at the interest of the student in the school – visits, early admission, etc – and will offer more financial aid to less interested stuents. • Schools also match “competitor’s prices” and use financial aid to fill up majors and departments that ppl are less interested in....
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This note was uploaded on 04/24/2008 for the course ECN 102 taught by Professor Seely during the Spring '08 term at Wilkes.

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