Forms of price discrimination

Discrimination against customers could be based on the following reasons.

Personal income. Different prices may be charged for the same commodity to different individuals depending on their income. For instance, doctors and lawyers may charge high fees on the rich and low fees on the poor for the same service.

Nature of the product, Different prices maybe charged for the same type of commodity because of packaging or branding. For instance, a text book with a hard cover may be sold at a higher price than that paid on one with a soft cover, even if the contents of the text books are similar.

Sex and age. Price discrimination may be according to age. For instance transport operators charge lower fares for children and high fares for adults over the same journey/ distance. Similarly, discotheques may charge lower entry fees for women.

Time. Discrimination may also result from time of service. Telephone charges are lower at night and sometimes on weekends. In the same way, transporters may change different fares according to time of travel eg higher rates at night.

Use of the product- State power corporations charge lower rates per unit of power for industrial use than for domestic use.

Differentiated commodities- Price discrimination according to this is seen where railway companies charge different rates for first class, second class, third class and so on. The same applies to air transport companies.

Geographical location of the market- Here the monopolist will sell at a lower price in one market and a higher price in another distant market for the same product.

Racial, religious and political differences may also favour price discrimination e.g. foreigners are charged higher entry fees than nationals at the wild life centre.