Sunday, 10 August 2008

Madonna Understands Price Discrimination

A pub owned by Madonna and Guy Ritchie is being investigated for price discrimination in the first degree, charging tourists up to 40p more per pint. If proved, The Punchbowl in London's Mayfair, could lose its license. I guess she really is a material girl.

Price discrimination is a common business strategy, used by everything from airlines who charge more for tickets booked closer to the travel date (usually less price-sensitive business travel) to movie theaters who charge less for more price sensitive seniors and students and "ladies' nights" at bars and clubs.

What standard should be used for determining whether price discrimination is acceptable in an economy? Is the problem here a different price being charged, or the fact that it was not transparently presented?

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