STIHL, Inc., manufactures gasoline-powered chain saws for professional, commercial, farm, and consumer markets. To “better serve” their customers, STIHL offers its chain saws in four different quality lines and associated price ranges: occasional use, midrange, professional, and arborist. 1- Under what circumstances could offering multiple qualities of a product be price discrimination? 2- What form of price discrimination might this represent—first-, second-, or third-degree price discrimination? 3- Explain why this practice could increase profit at STIHL.
STIHL, Inc., manufactures gasoline-powered chain saws for professional, commercial, farm, and consumer markets. To “better serve” their customers, STIHL offers its chain saws in four different quality lines and associated
1- Under what circumstances could offering multiple qualities of a product be
2- What form of price discrimination might this represent—first-, second-, or third-degree price discrimination?
3- Explain why this practice could increase profit at STIHL.
Price discrimination is a pricing strategy where a seller charges different prices for the same product or service to different customers or groups of customers.
The goal of price discrimination is to increase profits by capturing more of the consumer surplus that would otherwise be lost in a one-price system.
Price discrimination can be achieved through various methods such as segmenting markets based on consumer characteristics, location, or timing.
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