Wednesday, December 5, 2012

McArdle on price discrimination

Megan McArdle has an interesting piece on Groupon and pricing discrimination:

Coupons basically serve two functions for businesses--advertising, and price discrimination.  Advertising means it brings in new customers by making them aware of your service, or giving them an incentive to try it.  Price discrimination, on the other hand, is what food processors do with grocery store coupons: it lets them sell their products to customers who are very price sensitive, without lowering the price paid by people who are too busy or embarassed to clip coupons.
As far as I can tell, small businesses viewed Groupons largely as the former....

The problem is that for consumers, it seems mostly to have been about price discrimination....

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