Abstract

Many empirical studies have confirmed the validity and utility of price discrimination as a tool to attract more customers, increase sales, and boost revenues and profits. Several of these studies found strong market evidence of both second and third-degree price discrimination. This study confirms that price discrimination would not only work for monopolistic firms, as we have learned in the classic economic analysis, but also works effectively as essential element in a marketing strategy, especially for companies which adhere to the marketing principles on consumer satisfaction. This study also examines the utilization of price discrimination as a marketing tool by presenting the underlying theory and offering illustrative numerical examples. It further shows the different forms in which price discrimination comes in, the appropriate products eligible for price discrimination, the fields where such a strategy is applied, and the empirical studies involved.

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