Question

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Discuss an example of price discrimination coming from your own personal experience. Is it an example of first, second or third degree of price discrimination? Explain.

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Answer 1

Price discrimination is a selling activity that charges customers with different prices for the same product or service based on what the seller thinks they can get the customer to agree on.

Examples -

1) On January 2020, I decided to travel to my home town because I just got the off from college. Once I visited the airport for my boarding pass, the ground staff of Air India provided me with the ticket for 3000rs. Nothing was serious , until I saw my school mate in the same flight . When we started our conversation I get to know that she got the same economic fare at lesser price that is 2300rs. And I was shocked. I didn't understand the concept of charging ticket fare.

But that day I got to know that I was late in reaching the airport, and for latecomers, they charge a higher price. And was something miserable, like charging extra money for the same flight and same seat, not even business class. I understand the price discrimination strategy that day.

The above example was First-degree discrimination in price strategy. First degree means when business can accurately determine what each customer is willing to pay for that specific product or service. They charge money according to it.