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Price Discrimination (using the example of a coach operator)
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- Words:
- 1091
- Submitted:
- Sun Dec 15 2002
... Price Discrimination (using the example of a coach operator) Price discrimination is practiced by monopolies and involves the charging of different prices for the same product, in different sub-markets. Therefore, it is assumed that the market structure for a coach operator is monopolist. A coach operator would undertake price discrimination in the UK because it allows them to increase their profits, as they are able to capture excess consumer surplus and convert it into extra revenue for the firm. A coach operator will only be able to practice successful price discrimination if the firm is able to identify clear differentiated sub-markets, each with a varied Price Elasticity of Demand. Also, the coach operator needs to ensure that the benefits obtained from price discrimination in terms of revenue gained, outweigh the costs of undertaking price discrimination. The coach operator will only be able to undertake mostly 3rd degree price discrimination.
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