ECO 550 Discussion Week 5 Managerial Economics
Price Discrimination: The Path to Additional Profits
What is price discrimination? Here is some help with the basics. https://cdnapisec.kaltura.com/index.php/extwidget/preview/partner_id/956951/uiconf_id/38285871/entry_id/1_svaboiiy/embed/dynamic
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.
Given that background. Your business partner is strongly opposed to your proposal to charge your largest customers lower prices for your web-based services than you will charge your smaller customers? She is arguing it is unethical. Explain why both customers will be satisfied with the deal. What kind of price discrimination is this type of segmentation and how will the plan increase revenue?