Assignment Instructions: No Plagiarism Samuelson And Marks P

Assignment Instructionsno Plagiarismsamuelson And Marks Problem

Assignment Instructions . " NO Plagiarism " Samuelson and Marks, Problem # 14, p. 89. . " NO Plagiarism " In what respects are the following common practices subtle (or not-so-subtle) forms of price discrimination? Frequent-flier and frequent-stay programs Manufacturers’ discount coupon programs A retailer’s guarantee to match a lower competing price. Complete this essay in a Microsoft Word document, with a minimum of 250 words, APA formatted and then submit it as Assignment 5 " NO Plagiarism "

Paper For Above instruction

Introduction

Price discrimination is a prevalent strategy employed by firms to maximize profits by charging different prices to various consumer groups based on their willingness to pay. While some forms of price discrimination are overt, such as student discounts or senior citizen rates, others are more subtle, often hidden within complex marketing practices or policies. This essay explores how common practices such as frequent-flier programs, manufacturer discount coupons, and price-matching guarantees serve as nuanced forms of price discrimination.

Frequent-Flier and Frequent-Stay Programs

Frequent-flier and frequent-stay programs are among the most well-known examples of price discrimination. Airlines and hotels offer loyalty programs that reward repeat customers with points or discounts, effectively segmenting consumers based on their purchasing behavior. These programs often cater to customers who are less sensitive to prices, encouraging them to pay higher prices initially in exchange for future benefits. By doing so, firms extract consumer surplus from higher-value customers while providing discounts or incentives to more price-sensitive travelers or guests. This segmentation allows firms to price discriminate subtly, encouraging loyalty while maintaining higher prices for less price-sensitive customers.

Manufacturers’ Discount Coupon Programs

Manufacturers’ discount coupons are another form of subtle price discrimination. By distributing coupons predominantly through certain channels or to specific consumer groups, manufacturers can influence which consumers purchase at full price versus discounted rates. Coupons often target more price-sensitive consumers, allowing firms to retain higher prices for less sensitive buyers who do not use the coupons. This strategy enables firms to segment the market without explicitly stating different prices for different consumers, thus disguising the underlying price discrimination.

Price Matching Guarantees

A retailer’s promise to match lower prices offered by competitors may seem benign but can function as a form of price discrimination. Retailers use this policy to attract price-sensitive customers who might otherwise purchase elsewhere. Through price matching, retailers essentially hedge against losing customers to competitors offering lower prices, but do not typically lower prices across the board. This discreet approach allows retailers to segment their market — attracting price-sensitive consumers while maintaining higher prices for less sensitive buyers who are willing to pay full price without seeking matches.

Conclusion

In conclusion, practices such as frequent-flier programs, manufacturer coupons, and price-matching guarantees are subtle forms of price discrimination that enable firms to segment their markets effectively. These strategies help maximize revenue by extracting consumer surplus from different consumer groups without overtly declaring differential pricing. Recognizing these practices is crucial for consumers and regulators, as they influence market competition and consumer welfare.

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