Types of price discrimination
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There are two types of price discrimination: 1) selling identical goods or services to different customers at different prices, and 2) selling varied versions of the same product at different price points. Examples of the first type include a doctor charging rich patients more than poor patients for the same consultation or pensioners receiving reduced rates on services like dry cleaning. In both types, sellers charge higher prices to customers perceived as more willing and able to pay and lower prices for those with less demand.
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- 1. Types of Price Discrimination There are two types of Price Discrimination: 1. Sale of identical goods (or services) to different customers at different prices. Examples: • A doctor may charge a rich patient 30 euro for a consultation, while a poor person may be charged 15 euro for the same service, • Old age pensioners are sometimes offered services at reduced rates, Eg dry cleaning and hairdressing. In the above examples, the underlying feature is that the seller (or producer) charges higher prices for the same good to those customers perceived to be in the best position (ie willing and/or able) to pay such prices, and lower prices to those customers whose demand is not seen as strong.