Price discrimination happens when firms charge different people different prices for the exact same good or service. For example, a student at Shorewood High School gets to pay $8 to see "Billy Elliot" whereas I (an adult) have to pay $12 to see the exact same (amazing) movie at the exact same time.
1st degree price discrimination: when different people pay different prices for the same product because they have different price elasticities of demand; the value of the good is subjective and people are willing to pay different prices depending on their desire.
example: (identical) goods at the flea market in Lausanne
2nd degree price discrimination: when different people pay different prices for the same product because they purchase different amounts; the more consumers buy, the less (per unit) they have to pay.
example: Coca-Cola's purchase of sugar versus your purchase of sugar (per unit).
3rd degree price discrimination: when different people pay different prices for the same product because they fit into different market segments like age or location. The market segmentation is derived by different price elasticities of demand (i.e. students have more elastic demand than adults due to their having much less disposable income).
example: student discount at a sporting event
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