Preparation

Are you still unclear about the goal of price discrimination or what we mean by price discrimination? The following video provides an interesting application and may be useful in helping to formulate your discussion post for this week:

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Price DiscriminationLinks to an external site.
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Your instructor may post additional resources to help further explain concepts related to this week’s discussion.

Context

The idea that transactions in a marketplace work like an invisible hand is to some extent the idea that when a person chooses to buy an item at a given price, they are happy with the deal. There is no coercion. If the person really does not like the deal, they simply walk away.

This week’s discussion will give you an opportunity to explore direct and indirect price discrimination within the context of a hypothetical scenario.

For this discussion, use the following hypothetical scenario as the basis for your response:

· Your business partner is strongly opposed to your proposal to charge your largest customers lower prices for your web-based services than what you charge your smaller customers. She is arguing it is unethical, unfair, and possibly illegal.

Post a Response

Address the following in your discussion post:

1. Make the case that both groups of customers will be satisfied with the deal and that this is a perfectly legal form of pricing in a business-to-customer relationship.

· To what degree is this type of price discrimination?

· How will the plan increase revenue?

· Why will both groups of customers be satisfied with the deal?

· Why is this a legal form of pricing?

2. Use evidence from your textbook or other reputable sources, including any help in the discussion preparation, to support your case to your business partner.