Monday, March 14, 2011

Price discrimination = yahoo!

Whenever I talk about the concept of price discrimination, students and other audience members often get uncomfortable. It's probably because they are trained to think "discrimination = bad." What they don't realize is that price discrimination (PD) is ubiquitous and helps them when they most need it, when they are young, old, or down on their luck. PD is simply any mechanism by which sellers try to figure out how much to charge an individual consumer for a good. The most common example is probably the coupon. Sellers assume that anyone who takes the time to seek out a coupon and clip it must really want the price to be 15 cents (or 15%, etc.) lower to induce them to buy. Those who could care less about the five their blowing (that's from an old rap song btw) don't bother and pay full sticker.

Other forms of PD apply to enter groups, like people willing to eat dinner at 4 p.m. or, which often amounts to the same thing, senior citizens. Students can also leverage PD in their favor and to help them do that Onlinecollegesanduniversities.net has published "100 Niche Deal Sites Every College Student Should Know" that obviously goes beyond Groupon. Using such sites and inducing your professors to adopt open source textbooks like mine can help keep that student debt load down.

1 comment:

Kyle said...

Good post Dr. Wright. And thanks for being a believer in the power of open publishing as a foundation for a more rational, competitive, and equitable textbook market.