As we studied, direct price discrimination occurs when a company can identify ID members of the low-value group and charge them low price. As a result, Sam’s Club and CVS have succeeded in identifying their customers in order to offer them a lower price, for example, Sam’s Club offering its Plus member with discount coupons or offering ‘Preferred Shopping cards’.
However, indirect price discrimination occurs when a company cannot identify members of low-value group; OR they cannot prevent arbitrage. In this way, the company can discriminate by offering two products that appeal to different consumer groups. For example, Airline companies cannot identify ID members of groups , so they discriminate by offering two products (business class,
However, indirect price discrimination occurs when a company cannot identify members of low-value group; OR they cannot prevent arbitrage. In this way, the company can discriminate by offering two products that appeal to different consumer groups. For example, Airline companies cannot identify ID members of groups , so they discriminate by offering two products (business class,