Question

Cite an example of an industry which can practice price discrimination, and explain how it implements price discrimination.

Answer 1

Airlines, movie theaters, drug companies are examples of industries that can price discrimination. Airlines are able to segregate type of customers into travelers with high willingness to pay (business class) and with a lower willingness to pay (economy class) as wll as those who demand tickets in urgency versus those who plan in advance. Charges are different from different groups. Drug companies often give discounts to their regular users who are primarily the aged people and people with poor health.