9. Price Discrimination

Quiz 2 is today.
Assigned Reading
This is a real journal article. Don't freak out. Read as much of it as is useful. One purpose of this assignment is for you to figure out what ``useful'' means, without me telling you in advance. Also, ask yourself: Why do they have both parts to this article-- the stories at the start and the math at the end?

Central Idea: Price discrimination via quality reduction can increase both profits and consumer welfare.

Antithesis: Price discrimination and low quality always hurt consumers.

Topics That Might be Discussed in Class

Important Terms
Reservation Price, Perfect Price Discrimination, Crimping the Product, Pareto Improvement,
For Next Time

Additional Material

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Send comments to Prof. Rasmusen. Last updated: February 3, 2002.