Is Price Discrimination Good or Bad?
Some economists argue that price discrimination is a good thing, since it can make it profitable for sellers to offer goods and services which might not otherwise be profitable. This is certainly true. In addition, some level of differential pricing is inevitable, and part of the normal functioning of the marketplace. The polar opposite of having different prices for every buyer is having the same fixed price for everyone, which is essentially a command economy (i.e. communism or socialism). That doesn’t work, either. The reality is that price discrimination is neither good nor bad, but customers tend to dislike it unless they perceive that paying a higher price is worth more. Subtle forms of price discrimination (occasional discounts, packaging together multiple goods and services, value-added services, etc.) help sellers understand what customers really want to pay for a product or service, and are part of the give-and-take of a dynamic economy. More blatant price discrimination (lik
