Price Discrimination: Types Two-part tariff Quantity discounts Tie-in sales Quality Discrimination Menu Pricing Tell them about marketing of water. This slideshow was written by Ken Chapman, but is substantially based on concepts from Modern Industrial Organization by Carlton and Perloff, 4th edition, McGraw-Hill.

Examples of Menu Pricing Southwest Air fares Coupons This slideshow was written by Ken Chapman, but is substantially based on concepts from Modern Industrial Organization by Carlton and Perloff, 4th edition, McGraw-Hill.

Tie-in Sales and Bundling Expedia Streets Expedia Trip Planner Bundle Consumer $20 $15 $35 Professional $30 $10 $40 Table entries are reservation prices Strategy 1: Charge $20 for Streets and $10 for Planner Revenue = $60 Strategy 2: Charge $35 for the bundle. Revenue = $70 This slideshow was written by Ken Chapman, but is substantially based on concepts from Modern Industrial Organization by Carlton and Perloff, 4th edition, McGraw-Hill.

Conditions for Price Discrimination Market Power Identify Consumers Prevent or limit resale Services Warranties Adulteration Transaction Cost Contractual Remedies Vertical Integration Government Intervention This slideshow was written by Ken Chapman, but is substantially based on concepts from Modern Industrial Organization by Carlton and Perloff, 4th edition, McGraw-Hill.

Examples of resale limitation Textbooks Drug Resale from Canada Aloca 1890-1930 This slideshow was written by Ken Chapman, but is substantially based on concepts from Modern Industrial Organization by Carlton and Perloff, 4th edition, McGraw-Hill.

Major industries using Aluminum Industry Elasticity of Demand for Aluminum Integrated by Alcoa? Cookware -1.6 Yes Electric Cable Elastic (copper a substitute) Automobile Parts -1.5 Iron and Steel Inelastic (no substitutes) No Aircraft Inelastic (no substitutes at the time) This slideshow was written by Ken Chapman, but is substantially based on concepts from Modern Industrial Organization by Carlton and Perloff, 4th edition, McGraw-Hill.

Perfect Price Discrimination Demand .64 MC = .28 MR This slideshow was written by Ken Chapman, but is substantially based on concepts from Modern Industrial Organization by Carlton and Perloff, 4th edition, McGraw-Hill.

Two Part Tariff Demand .64 MC = .28 MR This slideshow was written by Ken Chapman, but is substantially based on concepts from Modern Industrial Organization by Carlton and Perloff, 4th edition, McGraw-Hill.

Different Prices to Different Customers This slideshow was written by Ken Chapman, but is substantially based on concepts from Modern Industrial Organization by Carlton and Perloff, 4th edition, McGraw-Hill.

Other Methods of Third Degree Price Discrimination Cut price on complaints L.A. Times Value of Time Rebates Willingness to wait Hard cover books This slideshow was written by Ken Chapman, but is substantially based on concepts from Modern Industrial Organization by Carlton and Perloff, 4th edition, McGraw-Hill.

Welfare Effects Perfect price discrimination Efficient Shifts surplus toward sellers Third Degree Price Discrimination Price > MC Inefficient allocation of goods between customers May make customers do inefficient things to earn the lower price. This slideshow was written by Ken Chapman, but is substantially based on concepts from Modern Industrial Organization by Carlton and Perloff, 4th edition, McGraw-Hill.