![]() Second-degree price discrimination: This is when a business charges different prices based on quantity sold-think discounts for bulk purchases.First-degree price discrimination: Also known as perfect price discrimination, this is when a business prices each product at its maximum value.There are three degrees of price discrimination. Cost to the firm of monitoring and evaluating data.Price discrimination (also called variable pricing) occurs when a business sells the same products at different prices through different channels.Consumers encouraged to spend time finding ways around the dynamic pricing.This could harm market share in the long-term. Consumers may feel they cannot trust a company who is constantly changing prices.To combat these headlines, firms can place manual limits on the amount prices surge by.Surge pricing can lead to bad headlines, e.g.Consumers who pay the higher price may feel ripped off. ![]() The idea of Uber was that it would prevent periods where you couldn’t find a taxi. It can smooth consumption over fluctuations in demand. Dynamic pricing is a way to avoid queues and excess supply.This gives a benefit to employers, but equally, it can lead to lower wages during a slump in demand and greater uncertainty over wages. Varying the price can enable the firm to pay employees a higher wage to work during peak times.If you know off-peak times will be cheaper, it can enable low-income consumers to consume a good they otherwise wouldn’t have. Consumers who travel at unpopular times can benefit from lower prices.Without dynamic pricing, it may be harder to get a taxi at a time of the day when taxi drivers don’t want to work. ![]()
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