Wednesday, July 12, 2017

How many ways can you price discriminate?

Also in my travels, I got to got to Heidelberg and rode the funicular up to the schloss. Their pricing schedule demonstrates multiple ways in which they price discriminate.

  1. The additional charge for the return down the hill (3 Euro = 12 Euro - 9 Euro) is much less than the  single ride up the hill (9 Euro). Since the stroll down the hill is a closer substitute than the climb up, demand is more elastic coming down.
  2. The "concession" is a catch-all phrase for the elderly, students, and maybe a few others. These folks tend to be poorer and more elastic and so get a discount.
  3. They charge lower average prices for groups of preschool children. This is a form of bundling.
  4. They charge lower average prices for large groups and the rates fall as group size increases. This is more bundling with larger groups being more elastic.
  5. Finally, families get increasingly larger discounts on ever more children. That is, there are quantity discounts on kids.
  6. Did I miss any other dimensions?



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