Price discriminationeconomics sample paper

Thursday, 26 March 2015.

The company may charge different prices for identical products with different segments of the market. In marketing terms, this is called price discrimination. However, this practice of doing business faces many contradictions on the basis of its legitimacy and morality. Some people say that this is an unethical and unlawful act of discriminating among clients through the use of prices, and some argue that from the moment the business operates in the free market, their right to be acceptable and to satisfy their best interests.Consumer ignorance is one of the factors contributing to price discrimination. Consumers of certain products, such as technical products such as medicines, have not generally notified the cost of production of services and products. In addition, they are not aware of the prices for which goods are sold to consumers in other parts of the market. Suppliers, which are often monopolies, use this ignorance to sell their products at the highest possible prices, which can be paid by consumers who do not know the information

According to Reinhardt (2013), price discrimination was a major factor that allowed many American practitioners to gain huge profits. He further notes that national health insurance companies with higher bargaining powers, such as Medicare federal programmes and Medicaid national programmes, usually pay less than the cost of medical services, while private insurance companies with less strength and private insurance patients who do not have an idea of the cost of health services and those in dire need of treatment are higher prices for medical services. Patients who are not insured are particularly charged on the basis of their expected income level, while those who think they are ill are charged with a significant discount, while those who think they are poor have various discounts to make their accounts much smaller. The basic idea behind uninsured patients is to cover the losses incurred as a result of falling prices for Medicare and Medicare, which are lower than the actual cost of medical care

Non-discrimination is not prohibited and can legitimately be carried out in the free market, which means that the State cannot interfere in price setting. This contradiction arises, however, when it comes to the definition of morality, ethics and the economic viability of the practice. From a business perspective, price discrimination is beneficial to business, as it maximizes revenue and helps to recover losses in other areas. Businesses may also be the reason that additional revenues from price discrimination are reinvested in business to increase it and create employment in the public interest

On the other hand, the consumer is very small to celebrate price discrimination. If the consumer finds itself in the segment of the market that recharges, the surplus will obviously be pumper, which negatively affects his or her savings. The criteria used in price discrimination may also be defective. Those who are considered economically stable may not be rich, and those who are considered poor may find themselves in a position of higher prices. Therefore, the criteria used may not be a moral obligation to help the poor. The company can use price discrimination as a competitive strategy against its competitors. The consumer can enjoy it, provided that competition is alive, but if other companies are defeated and forced out of the market as a result of discriminatory prices, there will be a monopoly, which has a higher chance of subjugating clients with inflated prices

In addition to the small proportion of consumers who pay low prices as a result of discriminatory prices, other direct advantages of discriminatory pricing for consumers are not easy. Even low prices are difficult for the company in the long run after they soon be appreciated. Price discrimination is generally used to ensure the best interests of the business, and not necessarily for consumers. Thus, as a consumer, I do not support the practice of price discrimination

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