Is versioning second or third degree price discrimination?
By Matthew Alvarez
Is versioning second or third degree price discrimination?
Figure 2.4 “Second-Degree Price Discrimination” illustrates the versioning concept. Ideally, the different versions should be perceived as having different levels of quality. We also maintain that the number of versions should be related to the number of distinct market segments.
What are the three basic defenses that a seller can use if accused under the Robinson-Patman Act?
Allegations of Robinson-Patman violations may be defended by asserting and proving either that the differing prices reflect only the cost of the seller’s manufacture or delivery (the “cost justification” defense); or, that the seller is attempting either (1) to meet the competition of another seller, or (2) enable his …
What are the four elements ie conditions that must be present in order for a company to be convicted of price discrimination under the Robinson-Patman Act of 1936?
The elements of the offense can be listed as follows: There must be (1) commercial price discrimination, – i.e., a commercial supplier must charge differing prices for the same or similar goods when selling them at around the same time to its favored and disfavored commercial customers; (2) the practice must entail a …
Is price discrimination different from versioning?
Is price discrimination different from versioning? Yes, price discrimination is selling products to different groups at various prices based on the groups’s willingness to pay. Versioning is creating different versions of the same product to sell to different groups.
Which act specifically outlawed price discrimination when such discrimination is not justified on the basis of cost differences and when it reduces competition?
The Robinson-Patman Act is a federal law passed in 1936 to outlaw price discrimination. The Robinson-Patman Act is an amendment to the 1914 Clayton Antitrust Act and is supposed to prevent “unfair” competition.
Which act specifically outlawed price discrimination when such discrimination is not justified based on cost differences and when it reduces competition?
What are the price discrimination exceptions?
These include: below-cost sales by a firm that charges higher prices in different localities, and that has a plan of recoupment; price differences in the sale of identical goods that cannot be justified on the basis of cost savings or meeting a competitor’s prices; or.
Why versioning is also called price discrimination?
Versioning (also known as “quality discrimination”) is a business practice in which a company produces different models of essentially the same product and then charges different prices for each model. In this way, the business is attempting to attract higher prices based on the value a customer perceives.
What are the different degrees of price discrimination?
There are three types of price discrimination: first-degree or perfect price discrimination, second-degree, and third-degree. These degrees of price discrimination are also known as personalized pricing (1st-degree pricing), product versioning or menu pricing (2nd-degree pricing), and group pricing (3rd-degree pricing).
How should price discrimination claims under the Robinson-Patman Act be evaluated?
The Supreme Court has ruled that price discrimination claims under the Robinson-Patman Act should be evaluated consistent with broader antitrust policies. In practice, Robinson-Patman claims must meet several specific legal tests:
When does the cost justification of discrimination not apply?
The cost justification does not apply if the discrimination is in allowances or services furnished. The seller must inform all of its competing customers if any services or allowances are available.
What is an example of price discrimination in the airline industry?
One example of price discrimination can be seen in the airline industry. Consumers buying airline tickets several months in advance typically pay less than consumers purchasing at the last minute. When demand for a particular flight is high, airlines raise ticket prices in response.
