Price Discrimination

Price discrimination is when a firm sells the same product at different prices for different people. An example of price discrimination is financial aid. In college, some students who would not be able to pay for college get financial aid. The price they have to pay is much lower than the students who don’t have financial aid. This is may not seem like price discrimination because a student a less fortunate student is being given money to enter college. However, the student is paying a different price for the same college as another student who is entering. In this situation, the financial aid is given to someone who cannot pay. If there was a scholarship given to someone, the student is getting a different price from the other students. In this situation, there is elastic demand, because the student has many choices of colleges to go to and by chance got a scholarship. Price discrimination also depends on the elasticity of demand.


3 Responses to “Price Discrimination”

  1. This is interesting. I wouldn’t have thought that financial aid is also an example of price discrimination. Good job explaining, Sami 🙂

  2. Sams,
    This is a great example of price discrimination. It’s especially interesting because so many students around the world including students in our school receive financial aid, and it could be that our peers have a financial aid based tuition system. I think this is quite a fair form of price discrimination most importantly because, all students deserve the right to education even if they come from less wealthier families. Financial aid gives the opportunity to such children to proceed with education despite their lack of funds.

  3. Swami,
    I must say this is a real unfair price discrimination. The problem however, is that without this financial aid, students with a lot of potential and capabilities, will not be able to learn and get a college degree. This will suppress innovation, and our world will not have major break-throughs without these smart people.

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