Week 2: Price Discrimination

Degrees of price discrimination

First Level:

1) Company knows customers' WTP perfectly

2) Set prices on individual level

eg. Internet Sales. And we can estimate the customers' WTP via promotion program (customer's price sensitivity)

Second Level:

Indirect price discrimination

1) Firms offer different deals, eg. combination of different price quantity and quality

2) consumers self-select according to their own WTP and preference.

Type: Non-liner pricing, Versioning , bundling

Non-liner pricing ( quantity discount )

1) Customer's WTP for the first product is highest and decrease accordingly afterwards

eg. Fixed cost+ flexible cost

Versioning

Differentiating products in quality, quantity, convenience, etc.

eg. Business Class ticket might be canceled, rebook and so on

eg. damaged goods

Third Level:

Group Pricing

 公司可通过观察消费者的特性，将其进行分组定价。

eg. work status (student discount) , location (water in airport), region , country, time (peak time)

Intertemporal  Pricing

产品刚进入市场的时候，打最高价，随着时间的推移，渐渐降价（iphone )