Price Discrimination is the situation where a company charges different amounts (in other words has different prices) to different people or under different circumstances. For example, it is considered a price discrimination to have different prices for:
1. People of different age
2. People that buy tickets using cash or with a credit card
3. The air plane tickets that change price based on how early or how late you bought it. They argue that it demands on the demand and the supply but as long as there are tickets available, the supply is higher than the demand and the prices going up is unreasonable.
Price discrimination is where the same goods (or more or less the same goods) are offered at different prices in different markets and/or to different people.
Let’s say for example, that company A operates two coffee trailers one outside a private hospital and the other outside a public hospital. Assuming that the costs to sell the coffee are the same in both cases, if the prices are different then this is price discrimination.
If the elasticity of the consumers of these two “markets” are different, then the price discrimination can be successful.