12ECO100OutlinePriceDiscrimination

Mean to second class ones become lavish in dealing

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mean to second-class ones, become lavish in dealing with first-class passengers. Having refused the poor what is necessary, they give the rich what is superfluous. Gazzale (University of Toronto) ECO100: Price Discrimination 12 / 16
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Within-consumer price discrimination Overview, within-consumer price discrimination Consumer with downward sloping demand Assume everyone with same MWTP schedule Discrimination= Effectively charging a different price for each unit If it could do so perfectly, it would look a lot like first-degree price discrimination . . . Gazzale (University of Toronto) ECO100: Price Discrimination 13 / 16
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Within-consumer price discrimination The quantity discount Tanya’s MWTP MWTP(1) = 10; MWTP(2) = 8; MWTP(3) = 3 The Pricing Scheme P = $ 10 20% discount if buy 2! 30% discount if buy 3! As long as MC < 3 . . . Gazzale (University of Toronto) ECO100: Price Discrimination 14 / 16
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Within-consumer price discrimination Bundling (Think cable TV . . . ) Assume consumer cannot purchase individual units 1 Number of items in bundle ( maximizes surplus ) 2 Bundle price ( appropriates surplus ) Gazzale (University of Toronto) ECO100: Price Discrimination 15 / 16
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Within-consumer price discrimination Two-part tariff (Think Costco . . . ) Two-part tariff=two prices 1 Per-unit price ( maximizes surplus ) 2 Fixed Fee ( appropriates surplus ) Gazzale (University of Toronto) ECO100: Price Discrimination 16 / 16
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