BUAD 307





Price Discrimination

PowerPoint Narration

Price discrimination is often employed in an attempt to get each customer group to pay the maximum that it is willing to pay for a particular procut.  There are two types of price discrimination:

  • Explicit price discrimination involves a requirement that a customer must meet a special condition—such as being a student or a senior citizen—to get the lower price.
  • Implicit price discrimination does not expressly impose an eligibility requirement but makes it less attractive for certain customers to go for the lower priced alternative.  Airlines, for example, often impose advance purchase requirements on airfares.  This is often fine for leisure travelers who know well in advance when they will travel.  It is, however, not attractive for business customers who may need to travel to see a client on short notice.

Please note subsequent material on legal issues as they relate to price discrimination.