Price Discrimination Essay

In the business world, price discrimination can be detrimental to small businesses trying to compete with larger organizations pricing. In the 1930s congress was worried about large multimarket firms using predatory marketing techniques in certain markets to bankrupt smaller firms in the area. In response, Congress enacted the Robinson-Patman act which prohibits larger forms conducting pricing strategies that contribute towards becoming a monopoly by getting rid of their rivals, the smaller family owned stores. With this measure in place the smaller mom and pop stores are better protected from the larger chains and can help to contribute more to the local economy. A downside of the act from a consumer standpoint is that the larger chain firm

Morton Salt, the FTC thought that the ability for the larger businesses to buy much more from wholesale producers such as Morton Salt, especially when Morton Salt had special discounts for firms that bought more product. The smaller firms could not compete and the commissioner found that it was monopolistic behaviour and put a stop to it. Another issue of ethics that presides in the study of price discrimination is that companies like morton salt are not very or at all transparent about the reasoning behind certain price discriminations. Companies do not actively state why certain products or services are more expensive for some customers and not others. In the journal article “The ethics of Price Discrimination” the authour Juan M. Elegido describes a common scenario in airline price discrimination tactics “The easiest way to spoil a plane trip is to ask your seatmate how much he/she paid for her/his ticket. You might well find that while you (or your employer) paid $1,100, your seatmate was making the same trip, with the same comfort, for only $180”. Why the vast difference? Only the airline knows for the most part, but they are not telling unless someone tried to dispute the price difference

The effects and methods businesses use price discrimination are varied from gas stations pricing their gasoline at different prices according to the location and population demographic they are in, to the movie theatres pricing different tickets according to age group. In any industry if a business can capitalize and make better profits by conducting price discrimination they will. As discussed previously price discrimination is not necessarily a bad thing for the economy or consumers, the general public will be able to find the same or similar goods at lower prices by shopping at larger firms, which can help less fortunate families greatly considering the current economic situation. Those that find products which they frequently buy at lower prices will purchase these items in larger quantities than before raising profits for the business and helping the general