Discuss the topic of price discrimination.
As the adage states, "the easiest way to start a fight on a plane is to ask the person next to you how much they paid for their ticket."
In other words, we all know that airlines price discriminate, but we hate to hear that someone pays less. So, this week you will read in chapters 13 and 14 various ways of profitably designing and implementing price discrimination schemes.
Meanwhile, our discussion will center around tiered behavior of pharmaceutical and airline firms and address the following:
Give examples of how each industry practices price discrimination.
What are the short and long term strategic reasons these industries employ tiered pricing?
Textbook: Froeb, L. M., McCann, B.T., Ward, M.R., Shor, M., Managerial Economics: A Problem-Solving Approach, 4th Edition