Using one example from your team discussion on price discrimination, why does the group paying the lowest price have a high price elasticity of demand? Examples of Price discrimination experienced :- Airline travel and time of departure :- Airlines charge different prices depending on the season and day of the week

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Using one example from your team discussion on price discrimination, why does the group paying the lowest price have a high price elasticity of demand?

Examples of Price discrimination experienced :-

Airline travel and time of departure :-

Airlines charge different prices depending on the season and day of the week. During the peak holiday season in August and Christmas, the price will be higher because demand is greater and more inelastic. Flights which occur during the week e.g. Mon to Fri will be more expensive because these are typically taken by business travelers. If you stay for over the weekend, the price will be lower, as business travelers will not want to stay over the weekend, just to get a cheaper flight. I often go to New York for a week in October. For a flight from Mon to Fri, the price quoted is usually around $1,500. If I change dates to leaving or arriving on the weekend, the price falls to $450.

Price discrimination based on increasingly sophisticated consumer data is a relatively new concept and it seems that the practice is still in its developmental stage. Practical challenges such as developing more accurate algorithms and preventing buyers to engage in arbitrage remain. But since price discrimination has a potential to bring increased profit to companies and benefit more customers, there is no doubt that the practice would continue to be developed and explored. Now may be the time to reexamine existing antitrust and anti-discrimination laws so that no legal quagmire (Hazardous situation) emerges when price discrimination based on consumer data becomes prevalent. Price Discrimination involves charging a different price to different groups of consumers for the same good. Price discrimination can provide benefits to consumers, such as potentially lower prices, rewards for choosing less popular services and helps the firm stay profitable and in business. Prices discrimination is both good for consumers and business.