1. Price Discrimination: Types
Two-part tariff
Quantity discounts
Tie-in sales
Quality Discrimination
Menu Pricing
Tell them about marketing of water.
This slideshow was written by Ken Chapman, but is substantially based on concepts from Modern Industrial Organization by Carlton and Perloff, 4th edition, McGraw-Hill.

2. Examples of Menu Pricing
Southwest Air fares
Coupons
This slideshow was written by Ken Chapman, but is substantially based on concepts from Modern Industrial Organization by Carlton and Perloff, 4th edition, McGraw-Hill.

3. Tie-in Sales and Bundling
Expedia Streets
Expedia Trip Planner
Bundle
Consumer
$20
$15
$35
Professional
$30
$10
$40
Table entries are reservation prices
Strategy 1: Charge $20 for Streets and $10 for Planner
Revenue = $60
Strategy 2: Charge $35 for the bundle.
Revenue = $70
This slideshow was written by Ken Chapman, but is substantially based on concepts from Modern Industrial Organization by Carlton and Perloff, 4th edition, McGraw-Hill.

4. Conditions for Price Discrimination
Market Power
Identify Consumers
Prevent or limit resale
Services
Warranties
Adulteration
Transaction Cost
Contractual Remedies
Vertical Integration
Government Intervention
This slideshow was written by Ken Chapman, but is substantially based on concepts from Modern Industrial Organization by Carlton and Perloff, 4th edition, McGraw-Hill.

5. Examples of resale limitation
Textbooks
Drug Resale from Canada
Aloca
This slideshow was written by Ken Chapman, but is substantially based on concepts from Modern Industrial Organization by Carlton and Perloff, 4th edition, McGraw-Hill.

6. Major industries using Aluminum
Industry
Elasticity of Demand for Aluminum
Integrated by Alcoa?
Cookware
-1.6
Yes
Electric Cable
Elastic (copper a substitute)
Automobile Parts
-1.5
Iron and Steel
Inelastic (no substitutes) No
Aircraft
Inelastic (no substitutes at the time)
This slideshow was written by Ken Chapman, but is substantially based on concepts from Modern Industrial Organization by Carlton and Perloff, 4th edition, McGraw-Hill.

7. Perfect Price Discrimination
Demand
.64
MC = .28 MR
This slideshow was written by Ken Chapman, but is substantially based on concepts from Modern Industrial Organization by Carlton and Perloff, 4th edition, McGraw-Hill.

8. Two Part Tariff Demand .64 MC = .28 MR
This slideshow was written by Ken Chapman, but is substantially based on concepts from Modern Industrial Organization by Carlton and Perloff, 4th edition, McGraw-Hill.

9. Different Prices to Different Customers
This slideshow was written by Ken Chapman, but is substantially based on concepts from Modern Industrial Organization by Carlton and Perloff, 4th edition, McGraw-Hill.

10. Other Methods of Third Degree Price Discrimination
Cut price on complaints
L.A. Times
Value of Time
Rebates
Willingness to wait
Hard cover books
This slideshow was written by Ken Chapman, but is substantially based on concepts from Modern Industrial Organization by Carlton and Perloff, 4th edition, McGraw-Hill.

11. Welfare Effects Perfect price discrimination
Efficient
Shifts surplus toward sellers
Third Degree Price Discrimination
Price > MC
Inefficient allocation of goods between customers
May make customers do inefficient things to earn the lower price.
This slideshow was written by Ken Chapman, but is substantially based on concepts from Modern Industrial Organization by Carlton and Perloff, 4th edition, McGraw-Hill.