Two cards, looking pretty much identical, one 'For my husband' and one 'For my wife'.
All very cute - but why would the 'For my husband' one cost 25% more than the other?
It's a great question for students to discuss -
What might cause a difference in the PED of the different market segments?
Why are Sainsbury's doing this?
How can they do this?
Should they be regulated due to customer exploitation?
Does the consumer benefit at all from this pricing strategy?
Draw the diagram showing this example of 3rd degree price discrimination....Oh, OK, I'll do it for you!
Can you see how the price in the combined market is lower than the inelastic market, but higher than in the elastic market.
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