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[7] [8] [2] Price discrimination is distinguished from product differentiation by the difference in production cost for the differently priced products involved in the latter strategy. [2] Price discrimination essentially relies on the variation in customers' willingness to pay [8] [2] [4] and in the elasticity of their demand.
The price can be increased or decreased at any point depending on the fluctuation of the rate of buyers and consumers. Price discrimination strategy is not feasible for all firms as there are many consequences that the firms may face due to the action.
Predatory pricing is a commercial pricing strategy which involves the use of large scale undercutting to eliminate competition. This is where an industry dominant firm with sizable market power will deliberately reduce the prices of a product or service to loss-making levels to attract all consumers and create a monopoly. [1]
“Price discrimination is a tool used by dominant corporations to enhance their market power,” he said. “That market power leads to higher consumer prices.”
Further reasons for sellers to implement PWYW pricing include price discrimination and market penetration. Price discrimination occurs automatically in a PWYW model since buyers with higher valuations of the product will choose to pay a higher price. Thus, price discrimination could result in higher revenues for the seller if costs are ...
Value-based Pricing is as much about a change in mindset, as it is about the underlying mechanics of establishing a price and the sales skills needed to achieve the price in the market. The most important first step in Value-based pricing is to address the mindset change, so that the entire commercial organization starts to think about selling ...
The critical loss is defined as the maximum sales loss that could be sustained as a result of the price increase without making the price increase unprofitable. Where the likely loss of sales to the hypothetical monopolist (cartel) is less than the Critical Loss, then a 5% price increase would be profitable and the market is defined. [6]
Most economic experts, meanwhile, believe such a move could ultimately serve to increase inflation and drive up costs for consumers, especially as Mexican and Canadian officials have promised to ...