OnDemand WTP Pricing Research

What is price discrimination and is it ethical? | Econsultancy

Ecommerce is growing and information technology is becoming more robust. As a result, some innovative pricing strategies have come into play.

Dynamic pricing is one that has been applied more broadly across a variety of industries, and its usage is growing among retailers.

Let’s take a closer look at price discrimination and how it has evolved, the legality and ethical implications, and why many companies see it as an effective tactic.

What is price discrimination?
The most basic definition of price discrimination is the act of charging different prices for identical items.

The purpose is to capture consumer surplus (the money left of the table by charging a fixed price when some consumers would be willing to pay more), and maximize the area under the demand curve (i.e. revenue).

There are three degrees of price discrimination

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What is price discrimination and is it ethical?