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Profits earned by a firm that can perfectly price discriminate tend to be greater than those earned by a firm that practices second-degree price discrimination.
A selling tactic known as price discrimination includes paying clients various rates for the same good or service depending on what the vendor believes they can encourage the customer to accept. When a merchant uses pure price discrimination, they charge each consumer the highest price they will agree to.
Second Degree Price Discrimination: Charging consumers a varied price depending on the amount or quantity consumed is called second price discrimination.
- A phone plan that increases the prices once a certain number of minutes have been utilized
- Reward cards that offer loyal customers a discount on upcoming purchases
- Quantity discounts are offered to customers who buy a specific amount more of a certain product.
In second-degree price discrimination, the ability to gather information on every potential buyer is not present.
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