Monday, February 13, 2012

What type of price discrimination is involved in issuing coupons?

I would have thought it would be 3rd degree price discrimination as the coupons are only issued to a certain demographic. (Those who have access to the coupons)

However, isn't it also 2nd degree price discrimination as once you use the coupon, it is gone and the quantity demanded by reflects the price. Also the coupon may state first pizza is cheaper only.



I don't think it's 1st degree necessarily even if 2nd and 3rd are satisfied.

Is it first degree in the scenario I have described above?

Both the quantity determines and the identity determines it...What type of price discrimination is involved in issuing coupons?
Definitely secondary, as the offer is open to any customer, disregarding the fact that not everyone has access to the newspaper, and is limited by time, as most coupons expire.

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