Zero Discrimination Day 2018 is on Thursday, March 1, 2018: Could practicing second-degree price discrimination improve consumer welfare?

Thursday, March 1, 2018 is Zero Discrimination Day 2018. United Nations News Centre - World AIDS Day: UN hails gains in ... World AIDS Day: UN hails gains

Could practicing second-degree price discrimination improve consumer welfare?

The answer is yes and no. I'll use the example of an airline to illustrate this. Say on some flight to Spain the airline has lots of seats still available 3 days before the day of the flight. Clearly if the airline doesn't fill the plane it will not be profit maximising. This is because the marginal cost of putting an extra person on the flight is near to zero (they may have to pay for an extra in-flight meal and extra fuel but not much else). Therefore it drops the prices of the remaining tickets 3 days before flight day in order to ensure the plane is filled and profits are maximised. This will allow people who previously couldn't afford to go on the flight to go on it. Clearly these people will have gained more consumer surplus (welfare) by going on this flight than if they hadn't.

However all those people who had previously bought the tickets at full price won't have their welfare improved. They had to buy the tickets at a price above the Pareto efficient allocation and hence their consumer welfare has been turned into the airlines supernormal profits.

Hope that helps.

Amazon Gold Box

Electric utilities often practice second-degree price discrimination. Improve consumer welfare?

Electric utilities often practice second-degree price discrimination. Improve consumer welfare?

The answer is yes and no. I'll use the example of an airline to illustrate this. Say on some flight to Spain the airline has lots of seats still available 3 days before the day of the flight. Clearly if the airline doesn't fill the plane it will not be profit maximising. This is because the marginal cost of putting an extra person on the flight is near to zero (they may have to pay for an extra in-flight meal and extra fuel but not much else). Therefore it drops the prices of the remaining tickets 3 days before flight day in order to ensure the plane is filled and profits are maximised. This will allow people who previously couldn't afford to go on the flight to go on it. Clearly these people will have gained more consumer surplus (welfare) by going on this flight than if they hadn't.

However all those people who had previously bought the tickets at full price won't have their welfare improved. They had to buy the tickets at a price above the Pareto efficient allocation and hence their consumer welfare has been turned into the airlines supernormal profits.

Hope that helps.

No mosque near ground zero?

No mosque near ground zero?

To all people saying its a insult to the death of the americans in the twin towers:

What about the billions killed by american soldiers, huh? iN the last 20 years, americans have killed billions of muslims and EXTREMISTS have killed 3000 which also have no connection with real Muslim. Wonder why it has been the ONLY attack in the last 20 years? Its because they arnt a threat. I bet LOTS of muslims also died that day

f you've seen Pakistan or Afghanistan you'll see a lot of Churches over the occupied areas. I haven't seen any Afghani or Pakistani rioting about that. Also, its a mosque. A place of worshiping, not a memorial to Osama Bin ladin.

I really don't have any objections to this, or can't know why anybody would. The terrorists who made the attacks were extremists and don't represent even a significant percent of the Muslims of the world. Treating all muslims wrong because of them is a horrible thing that people should avoid doing. It only feeds the hatred and segregation.

Honestly, I think that Americans are victimizing themselves a bit too much. There is more discrimination against Muslims than ever, since 2001. If they want to build a mosque two blocks away, so be it. It's just the fact that people make the association between Muslims and terrorists because of the propaganda and biases. Nobody mentions the elite Christian militia in the Central US. They could be considered as armed fanatics, or terrorists for that matter. But they're not. The reason why is that nobody thinks that there can be a white terrorist. People associate a turban as a symbol of terrorism, let alone a formal headdress. The reason people protest is because of the position they were put in by government propaganda and messages. This is America, they have the freedom of religion, they have FREEDOM. Let them do as they wish and stay out of their way.

Agoda
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