Examples Student discounts U Pass student dental plan SPC free banking

Examples student discounts u pass student dental plan

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Examples : - Student discounts: U-Pass, student dental plan, SPC, free banking - Translink: Concession rate for seniors, children and students - Movie tickets for kids - Golf courses: Weekdays vs. weekends - Shopper’s Drug Mart: Senior’s day - Microsoft, Apple: Education price for teachers and students - Telus, BC Hydro: residential vs. business customers - Dumping in international trade 2 necessary conditions for ordinary price discrimination : - Identify sub-markets with different price elasticities of demand - Segment the market by preventing resale (arbitrage) Practices: - Free but delayed stock prices - Airline tickets: advanced booking discount - Grouse Mountain Y2Play pass - Coupons 11
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- iPad (and many other things) price falls over time 5. Two part pricing Firms charge twice: a lump sum fee + per unit price . It’s also called two part tariff. Examples: - PNE Playland: Entrance fee + price per ride - Nightclub: Cover charge + drink price - Shaw and Telus internet service: Installation fee + monthly fee - Golf courses: Membership fee + green fees - Car rental: Daily fee + mileage charge 12
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*The optimal two-part pricing strategy is to set P = MC and charge an entry fee = consumer’s surplus . Note : Two part pricing has the same effects as the perfect price discrimination: - The firm extracts all consumer’s surplus – most profitable. - The efficient quantity is produced. Q: Why two part pricing is not used widely? - Different preferences of consumers: Different willingness to pay for entry fee - Uniform entry fee deters low demand consumers Homogeneous consumers => Two part pricing Heterogeneous consumers=> Price discrimination Example: - Costco: Membership fee + price - Real Canadian Superstore: No membership fee 13
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  • Spring '08
  • HANAFIAHHARVEY

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