Contact Us
Sign In / Sign Up for FREE
Go to advanced search...

Should firms price discriminate, why or why not - Essay Example

Comments (0) Cite this document
Should Firms Price Discriminate, Why or Why Not? In the contemporary setting of the world, manifold modern business organisations in divergent forms of industries have attempted to develop a tactic to gain competitive advantage in the dynamic market. One type that has received significant recognition in the business world is associated to the companies’ use of price related approaches to deal with the fluctuating demand in the market…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER94.6% of users find it useful
Should firms price discriminate, why or why not
Read TextPreview

Extract of sample "Should firms price discriminate, why or why not"

Download file to see previous pages Such concerns will be depicted in this paper and each will be discussed in detail. Price Discrimination Evolution is not only associated to management practices of business organisations, but also to what these organisations are operating for--those are stakeholders. Consumers, being a predominant external customer of companies, have also evolved in terms of their preferences. They collate different prices of similar products offered in different market environments and decide whether or not to buy such a good or service (Turow, 2005, p.125). For instance, consumers can now demand certain attributes of products that these companies produce resulting the market to become dynamic and diversified (Poynor Lamberton & Diehl, 2013, p.394). With such a smart choice, companies also conduct an investigation on their target market and decide whether such a segment is or not a profitable market (Turow, 2005, p.125). ...
From this point, companies can charge a maximum price to the market segment with a more price inelastic demand and a minimum price for the market segment with a more elastic demand. With this kind of technique, companies can achieve a higher level of producer surplus from the increase in their total revenue and profits. To increase the profit, the company should exert effort to balance marginal revenue and marginal cost in each group of market (Stigler, 1987, cited in Elegido, 2011, p.635). Barriers to Prevent Consumers Switching. Consumer switching is significant in the theory of consumer preferences wherein the combined effect of their budget constraint and choices can affect the entire decision making process of customers, leading them to switch from one supplier to another (Elegido, 2011, p.637). For price discrimination to work, companies must prevent consumer switching--a method in which lower-priced products that are sold to customers can be resold by the latter to those customers who are willing to pay for its premium price. It must be noted that companies must not use price discrimination if they cannot eliminate the threat of consumer switching as they cannot compete for both types of consumers: “high and low willingness to pay” (Corrocher & Zirulia, 2010, p.150). Paradigms of Price Discrimination First-Degree or Perfect. First-degree or perfect price discrimination is a pricing tactic whereby companies charge each customer a different price for similar products purchased with no cost relation. Three results are prevalent when it comes to using this tactic: an increase of profits, a decrease in the level of consumer surplus, and an increase in the level of producer surplus (Mankiw, 2012, p.316). ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
(“Should firms price discriminate, why or why not Essay”, n.d.)
Should firms price discriminate, why or why not Essay. Retrieved from
(Should Firms Price Discriminate, Why or Why Not Essay)
Should Firms Price Discriminate, Why or Why Not Essay.
“Should Firms Price Discriminate, Why or Why Not Essay”, n.d.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Should firms price discriminate, why or why not

Firms Research

...?A Comparative Analysis of Three Architectural/Interior Design Companies Bluarch Bluarch Architecture and interiors was founded in 2004 by Antonio DiOronzco, who combines his work as the principal of this company with his continued work teaching both architecture and interior design at several institutions. Orozco is assisted in the workings of the company by some nine other colleagues who are involved both with the design practices as well as with the business orientated aspects of the day to day running of the business. Bluarch, which is based in New York City, offers services in both architectural design and interior design and also caters for any master planning projects. The firm prides itself on being, “Dedicated to design innovation...
10 Pages(2500 words)Research Paper

Large Firms and Small Firms

...?Large Firms and Small Firms Introduction The firms are ified into small, medium, and large firms according to the nature and size of the business conducted by them. Each level of the firms is defined differently in different countries taking the rules and regulations into account. Polly Roberts writes on differentiating the firms noting that larger and smaller firms differ in their internal factor prices. He says, “Larger firms pay less for capital and more for labor; smaller firms pay more for capital and less for labor” ( Roberts, n.d.). However, there are numerous definitions for the firms among various economists; and researchers are still on their efforts to study more on the competitive factors between large firms and small firms...
6 Pages(1500 words)Term Paper

Kindle: Price

Kindle Kindle According to a survey done by Amazon Company themselves, millions of people are assumed to be using the kindle bearing in mind that 3 million kindles have been sold since 2009. The kindle, even though it provides a digital version of a book, is said to be a less expensive option of acquiring a book due to the digital format (Fox, 2012). Therefore, in order to allow more people to read more books, it is vital to come up with a proper pricing technique, which will ensure that the number of people using the kindle doubles or triples in a short period of time. Since not many organizations have managed to come up with a technology that can challenge the kindle, it is vital for Amazon to select a pricing decision that will...
3 Pages(750 words)Essay


Price is also very import in marketing. It is one of the four variables that are considered when coming up with marketing strategy. In the marketing mix, price is the utmost factor which determines how the commodity is accepted in the market and in which market segment that product will have to be sold. It is also used by business when they are developing the marketing plan for the products.
In our ordinary life we use the term price in order to refer to the amount or the quantity of payment that is made in order to acquire something. In this regard it is taken as a form of compensation that is given in exchange for something. When not referring to the economical terms, price has the same meaning of the compensating for...
9 Pages(2250 words)Essay

Promotion & Price

SLP for MD03 Basically, the service business being launched is an Event Management Company called Phoenix Event Management. The location for the business will be in the heart of the city’s corporate district. The following section of the paper outlines the measures that can be taken in the implementation of the business in order for it to be a success.
The information required by potential customers is related to the services offered by the business as well as its exact geographical location so that it can be easier for them to physically visit it. Communication channels can also be segmented in order to reach a wide range of people given that the business particularly offers servi...
2 Pages(500 words)Research Paper

Should firms price discriminate

...PRICE DISCRIMINATION Should firms price discriminate? (1500words Profit maximizationis our target-price discrimination is our tool.” By Unknown monopolist History of economic thought states that the main objective of the firm is to minimize its cost and to maximize its profit using any legal methods available. Therefore, we can conclude that it would be profitable for a firm to apply price discrimination (PD). However, we should not ignore cases and issues arising when applying discriminatory strategies as this can affect a firm’s choice whether to discriminate or not. The utility and consumer surplus theorems played a vital role in our understanding of PD and importantly how it might help in achieving a business goal. Therefore, PD can...
6 Pages(1500 words)Essay

Discriminate Between Intrapreneurship and Entrepreneurship

...Discriminate Between Intrapreneurship and Entrepreneurship within Various Business Settings Introduction The reason why intrapreneurs and entrepreneurs have suddenly became more important is because at present we are under the influence of the new technologies. Decisive roles are being played by the intrapreneurs and entrepreneurs as they help the company to enter into the new markets to engage in one’s own business ideas. The concepts of entrepreneurship are considered to be the process of developing and uncovering an opportunity and creating value by seizing the opportunity through innovation, without any regards to the location of the intrapreneur or entrepreneur in existing or new company. The concept of intrapreneurship represents...
6 Pages(1500 words)Assignment

Price Elasticity

...Macro and Microeconomics: Price Elasti Discuss cross price elasti as it pertains to substitute goods and complementary goods Cross-price elasticity as it pertains to the demand generally measures good demand responsiveness to price change of another good. In most cases, cross-price elasticity of demand tends to measure the rate of quantity response that is demanded on a particular good because of price change of a different good (Tobin, 1987). In this case, substitute goods generally refer to a pair of goods in which the consumers consider alternative. On the other hand, complementary goods are those that are used together; one item is usable only when the other item is available. In this case, if goods A and B are complementary, they have...
1 Pages(250 words)Essay

Price Discrimination

According to the research findings, customers can benefit from research and development as a result of increased revenue that companies earn. In the service industry, some of the customers will benefit from the low price on off-peak time and the firms will benefit on the peak time due to high prices on services and products. Some of the firms will increase revenues and be able to be a going concern in business and even expand.According to the research findings, customers can benefit from research and development as a result of increased revenue that companies earn. In the service industry, some of the customers will benefit from the low price on off-peak time and the firms will benefit on the peak time due to high prices on servic...
6 Pages(1500 words)Essay

Personal and Social Context of Agnes Price

...Discussion of Need in Relation to the Personal and Social Context of Agnes Price Submitted November 25, 2005 ID Abstract This paper will include an assessment of a 64 year old woman who lives with family and is suffering from depression. The assessment will be made based on Bowen’s System Theory with consideration for the fact that Agnes is in the latter part of her life span and has a number of stressful conditions to deal with. This case is being opened as a result of concerns raised during a family health visitor’s regular visits to the home where Agnes resides with her daughter and the young woman’s family. In addition to creating a case plan for Ms. Price this document includes a discussion of the rationale, theory and ethical...
7 Pages(1750 words)Case Study

Organizational Effectiveness in Entrepreneurial Firms

... by the workers and the employees alike should match some pre set standards and there is no alienation as far as this point of view is concerned. The third significant point of the operational managers is that they have to plan in a sound manner all the different things, control these activities and tasks and make them plot against short term gains rather than having a long run perspective and integrate all these activities so that there is a complete mesh in the related ranks and the synchronization is pretty apparent at the end. The last imperative basis holds on the part of the operational manager in the form of his lookout for constant changes that happen within the realms of an organization and which cannot be denied their due role...
10 Pages(2500 words)Assignment

Effect of Taxation on the Investment Decision in Firms

Realistic tax policy in a developing country can ensure large availability of vital foreign funds and investments and therefore give a boost to the economy. The government dishes out sops to specific sectors and fulfills its task of generating enough growth in high-risk sectors. The investment decision of firms depends upon various factors like the political will and stability, the infrastructure and the tax regime. The taxes levied on corporate investments also have a direct bearing on the profitability of these firms; hence they become a vital factor while taking any investment decisions. This, therefore, makes tax rates an important instrument with governments who manipulate it to ensure the economic growth of a country.
6 Pages(1500 words)Research Paper

The Difficulties Faced by Firms within the International Market

Regarding this issue, in a report published by the World Economic Outlook (2002, 82) it is noticed that ‘trends and cross-country differences in corporate indicators reflect a variety of country-specific institutional and macroeconomic factors, as well as industrial specialization and firm size, with the following key policy implications’. In other words, the problems faced by multinational corporations globally usually reflect the weakness of these firms to respond to the current needs of the particular market and especially to the customers’ preferences as they are developed under the influence of specific social, political and cultural principles. The difficulties faced by firms within the international market...
12 Pages(3000 words)Term Paper

The Role of Globalization in the Development of Firms Competitiveness

The power of firms within their local market defines their potential to compete effectively the other firms that operate within the same sector in the international market. The fact that despite the existence of many multinationals, local firms have often more powerful presence within the market of a specific country that supports the above view. As an example, we could refer to the supermarket industry and the case of UK where Tesco, a firm that is well expanded across the country dominates the country’s relevant market despite the fact that there are other firms within the same market that have become international, like the case of Marks and Spencer. Indeed, in accordance with a series of current data (the most current av...
10 Pages(2500 words)Term Paper

Why Firms Outsource HR Activities and What Are the Potential Problems and Benefits of Outsourcing HR Activities

With minor changes here and there, these companies have taken giant strides in their respective human resources fields and thus made a mark for their own selves. It is a common phenomenon that a business can move away from a stand of firmness and consistency to one of a comprehensive weak one as the same is willing to grab hold of the varied means present within the market as well as the driving factors.

The United Kingdom has witnessed a lot of change within the economical shifts of late. What this echoes is the fact that people and more so the companies have started to move out of the UK in the wake of achieving different goals for their own selves and in a quest to achieve what they have not been able to, in the yes...
6 Pages(1500 words)Term Paper

Binomial Method in Option Price

The step by step procedure in option valuation using the Binomial method, explains the simplicity and accuracy of the method. The Binomial method tree generation has been implemented in Excel software and has been tested with some historical data collected. The results show that the valuation of European and American options with the Binomial option tree method proves that this method is a better predictor of the future prices of options.
This chapter intends to introduce the research background and related concepts. The main research question, supporting hypotheses are to be explained in detail. Also, the scope and limitations of this research are detailed in this chapter.
The crash of the stock markets in October 198...
48 Pages(12000 words)Assignment

Firms Strategy and Markets

Proceeding with the discussion, we find that there are implications of the social responsibility that limits profitability and is in conflict with Friedman’s assertion. First, in the corporate situation, the social responsibility of the corporate executives is to conduct the business to conform to the desires of the Board and the stockholders to make as much money while conforming to the basic rules of the society. This does not always hold true as there are some basic rules of the society that runs conflict with the desires of the Board to make as much money since there are actions that reduce the return to income. For example, when corporations are required to contribute to the pollution control beyond the amount that is i...
9 Pages(2250 words)Coursework

The Establishment of Firms in Modern Market

... by Smith et al. (2006) as an indicative example of the above case. However, if innovation is the key element of a firm’s competitive strategy, then the facilitation strategy should be chosen – the example of the employees in the game software industry best describes the terms of the above case. The above arguments can be supported by referring to the theory of Schuler and Jackson (1987), which was based on the theory of Porter on competitive advantage. The theory of Schuler and Jackson (1987) helps to understand the role of HR strategies within modern organizations and to explain under which terms HR strategies are transformed in order to support the achievement of a firm’s competitive goals. In accordance with Purcell et al. (2007) two...
9 Pages(2250 words)Term Paper

Price Ceiling and Price Floor

...Introduction In a perfect economy, the market moves to an equilibrium. The prices of a good rise or fall to its equilibrium level – the level at which the quantity of a good demanded by customers is equal to the quantity of good that producers are prepared to supply. However, a Government has to undertake certain price control mechanisms. The reasons behind such a price control might be anything: Political Reasons; Social reasons; or to benefit a particular group of society. However, indications point that such Government intervention to control prices lead to inefficiency in market. This essay analyzes price controls as imposed by the Government and their effect on the market efficiency. Price Controls and their types Defined...
4 Pages(1000 words)Research Paper

Factors that Influenced the Profitability of Firms in the Financial Sector

...THE FACTORS THAT INFLUENCED THE PROFITABILITY OF FIRMS IN THE FINANCIAL SECTOR ACROSS THE EUROZONE IN This paper addresses the financial turmoil in the Eurozone with specific focus on the banking and financial institutions. The literature review covers some of the academic literature that gives a detailed analysis of the origin and the extent of the financial crisis. This include some of the strategies and steps that have so far been implemented by some selected nations with main focus on Portugal, Greece, Italy, Spain and Ireland the strategies that have been used by the states in dealing with the turmoil. Some of the causes and repercussions of the crisis have been addressed to include the impact on major economies in the world...
8 Pages(2000 words)Term Paper
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic Should firms price discriminate, why or why not for FREE!

Contact Us