Price Discrimination

Discipline: Economics

Early analysis of this phenomenon was undertaken by English economist Arthur Cecil Pigou (1877-1959).

Price discrimination describes the sale of identical goods or services in different markets at different prices.

Pricing is usually linked to ability-to-pay; thus, students or pensioners may pay less than others for social services. On a larger scale, modern pharmaceuticals companies frequently sell the same compounds at radically different prices in different (especially European) countries because the local market demand will allow it.

Also see: ability-to-pay principle, equal sacrifice theory

Source:
A C Pigou, Economics of Welfare (London, 1920)

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