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Price Discrimination Essay
The first 200 words of this essay...
Price Discrimination is the practice of charging different consumers a different price for the identical good or service for example charging children, university students and old aged pensioners lower prices than other cinemagoers.
There are three types of price discrimination, first degree, second degree and third degree price discrimination. The first price degree discrimination, involves charging each consumer the price they are individually prepared to pay. In first degree discrimination the seller or the firm would have captured the entire consumer surplus and this will now be producer surplus, thus a firm or seller earns a higher level of profit than simply charging a single price to all of its consumers.
Second degree price discrimination involves charging different prices for different amounts consumed. Third degree price discrimination involves charging different prices to different groups of people such as charging students, children and the elderly different prices. The firm of a market where this type of discrimination occurs is capable of differentiating between consumers, such as student or senior discounts. A student or senior consumer will have a different willingness to pay than an average consumer. Thus the firm sets a lower price for that consumer because that
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Review of essay
Rating: 4 star(s)
Response to the question
This essay engages well with the question, offering an insight into price discrimination whilst giving disadvantages and advantages for both the consumer and firm. I would've liked to have seen a bit more evaluation on the second question regarding desirability, using phrases such as "it depends upon" etc.
Level of analysis
The analysis in this essay is strong, picking out the key conditions of a market where price discrimination is applicable. If I were answering this question, I would've applied some of the conditions to a market which price discriminates. For example, I would comment that it's easy to separate ticket types on a train, and can use age segments. The diagrammatical analysis is strong, and the concept of consumer surplus is strongly explained. I liked how they show the mechanism of the diagram, commenting on P1, P2, etc rather than aimlessly placing it in the essay. Following from their point about profits leading to research and development, I would've liked some evaluation to whether a market not price discriminating could afford to invest in this. Some discussion of efficiency in the long run may have been useful here. When talking about price discrimination, I always note that it actually makes services available to some groups. For example, without price discrimination, train services would not sell off-peak tickets, limiting students and pensioners access due to the cost involved.
Quality of writing
This essay is structured well, following the subheadings clearly. I was impressed with the style, as they use connecting words such as "thus" or "moreover" to link the stages of the mechanism. Showing such sophistication allows marks to be given for analysis, as it shows understanding of the concept. Spelling, punctuation and grammar are strong throughout.
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