Samuelson And Marks Problem 14 P 89 In What Respects Are The

Samuelson And Marks Problem 14 P 89in What Respects Are The Follows

Samuelson and Marks, Problem # 14, p. 89. In what respects are the following common practices subtle (or not-so-subtle) forms of price discrimination? a. Frequent-flier and frequent-stay programs b. Manufacturers’ discount coupon programs c. 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 Samuelson and Marks, Problem # 10 p. 88. A New Hampshire resort offers year-round activities: in winter, skiing and other cold-weather activities; and in summer, golf, tennis, and hiking. The resort’s operating costs are essentially the same in winter and summer. Management charges higher nightly rates in the winter, when its average occupancy rate is 75 percent, than in the summer, when its occupancy rate is 85 percent. Can this policy be consistent with profit-maximization? Explain. Complete this essay in a Microsoft Word document, with a minimum of 300 words, APA formatted and then submit it as Assignment 6 by midnight, Day 7. Submission

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Price discrimination is a fundamental concept in economics where firms sell the same product or service at different prices to different consumers, based on their willingness to pay, without a cost difference. While some forms of price discrimination are obvious, others are more subtle, often embedded within marketing practices and consumer interactions. This essay explores three common practices—frequent-flier and frequent-stay programs, manufacturers’ discount coupon programs, and retailer price matching guarantees—and examines how they serve as subtle forms of price discrimination.

Firstly, frequent-flier and frequent-stay programs are widespread in the airline and hotel industries. These programs offer rewards or discounts to customers who repeatedly use their services. The underlying mechanism allows firms to segment consumers based on their purchasing behavior. High-frequency travelers, often accustomed to traveling for business or leisure, tend to value these programs more and are willing to share more information about their travel habits. Such programs effectively segment consumers into different groups—those who receive preferential treatment (e.g., free flights or room upgrades) and those who do not—without explicit acknowledgment of differential pricing. This form of price discrimination is subtle because it relies on consumer loyalty and behavior rather than upfront price differences. The programs incentivize continued patronage and subtly discriminate based on the consumer’s willingness to participate actively.

Secondly, manufacturers’ discount coupon programs exemplify a subtle pricing strategy. Coupons help firms target price-sensitive consumers by offering discounts that are conditional on the consumer’s willingness to seek out and redeem such coupons. This method effectively discriminates between consumers who are more price-conscious and more willing to invest effort in obtaining discounts and those who are less sensitive or less willing to do so. Coupons also create an illusion of a sale or bargain, encouraging purchases that might not have occurred at the original price. In essence, coupons allow companies to charge higher prices to less price-sensitive consumers while offering discounted prices to more sensitive segments, all without visibly altering the sticker price. This subtle segmentation exploits consumer behavior and perceptions, making it a nuanced form of price discrimination.

Finally, a retailer’s guarantee to match a lower competing price represents a different form of price discrimination. While at face value, this practice appears to reinforce consumer fairness, it tacitly enables retailers to advertise a price advantage while effectively segmenting consumers based on their willingness to negotiate or seek out lower prices. Consumers who are more assertive or informed about competitors’ prices are more likely to benefit from price matching, effectively paying less than less-informed customers. This approach subtly discriminates against consumers less aware of competitors’ prices or less willing to engage in negotiation efforts. Therefore, although it seems consumer-friendly, it strategically segments the market, benefiting consumers who are active price shoppers and providing an advantage to businesses in maintaining competitive prices without explicitly raising prices for others.

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