PRICE DISCRIMINATION

1. The price-discriminating firm must be able to identify separate groups of consumers, based on some identifiable criteria – clear conceptual criteria – to be able to separate groups on this classification basis.
2. The firm must be able to keep the groups separate – apart from each other, so it can prevent re-selling of its product or service.
3. The groups must have different elasticities of demand in order to practice profitable price discrimination.
4. Typically -- To the inelastic demand – a high price
                          To the elastic demand – a lower price
5. Question: Is it easier to practice price discrimination in a physical product, or a service? Is there any difference?

Daytime and Evening rates – restaurants, theatres
"Senior" discounts
"Charity" medicine
Legal services

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