Price discrimination is a pricing strategy where a seller charges different prices for the same product or service to different consumers, based on their willingness to pay. This strategy aims to maximize revenue by capturing consumer surplus and can be implemented through various methods such as first-degree, second-degree, and third-degree price discrimination.

Price Discrimination

Price discrimination

A pricing strategy involves setting the right price for a product or service to maximize profitability while considering market demand, competition, and customer value perception. It requires a comprehensive understanding of cost structures, consumer behavior, and competitive dynamics to effectively position a product in the market.

pricing strategy

different prices

same product

Consumer surplus is the difference between what consumers are willing to pay for a good or service and what they actually pay, reflecting the benefit consumers receive from purchasing at a market price lower than their maximum willingness to pay. It is a measure of consumer welfare and is graphically represented by the area between the demand curve and the market price level, up to the quantity purchased.

consumer surplus

First-degree price discrimination

Second-degree price discrimination

third-degree price discrimination

Maximized revenue

Willingness to pay (WTP) is the maximum amount an individual is prepared to spend to acquire a good or service, reflecting the perceived value and utility derived from it. It serves as a critical indicator in pricing strategies, market research, and economic evaluations, helping businesses and policymakers understand consumer preferences and demand elasticity.

willingness to pay

Price Discrimination: Understanding Gender-Based Pricing

Price Discrimination: How It Affects Women in the Market

Analyzing Price Discrimination and Its Impact on Consumers

Exploring Price Discrimination and Its Impact on Consumers

Exploring Price Discrimination: Causes and Impacts on Gender

Analyzing Price Discrimination: Causes and Consequences

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