Thursday, January 24, 2002

Price discrimination Price discrimination helps companies sell their product more efficiently (maximizing surplus) and shifts surplus from consumers to producers (something polite societies officially frown upon). In essence, if I can sell some of my stuff for $15 and some of it for $5, more people can get my stuff than if I could only sell at $10. But it also means that some people are paying $15 for what they could have gotten for $10. It's not clear exactly how much legal protection companies have for price discrimination. They can offer paperbacks several months after hardbacks, but can't stop you selling your book after you've read it. In the UK, however, it seems that regional encoding (a way of price discrimination by geography) is protected and enforceable by law.


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