Kenapa konsumen dengan tingkat pendapatan berbeda dapat pula

§ Kenapa konsumen dengan tingkat pendapatan berbeda dapat pula menerima tingkat harga yang berbeda pula? § Kenapa konsumen diperkotaan menerima harga yang berbeda dengan konsumen diperdesaan? Chapter 5: Price Discrimination: Linear Pricing 2

§ Diskriminasi harga : perusahaan menaikkan laba dengan cara menjual barang yang sama dengan harga berbeda untuk konsumen yang berbeda atas dasar alasan yang tidak berkaitan dengan biaya. § Tetapi tidak semua perbedaan harga mencerminkan diskriminasi harga. § Diskriminasi harga didasari adanya kenyataan bahwa konsumen sebenarnya bersedia untuk membayar lebih tinggi, maka perusahaan akan berusaha merebut surplus konsumen tersebut dengan cara melakukan diskriminasi harga. § Tujuan utama pelaku usaha melakukan diskriminasi harga yaitu untuk mendapatkan keuntungan yang lebih tinggi dan keuntungan yang lebih tinggi tersebut diperoleh dengan cara merebut surplus konsumen Chapter 5: Price Discrimination: Linear Pricing 3

§ Syarat diskriminasi harga: § Barang tidak dapat dipisahkan dari pasar satu ke pasar yang lain. § Sifat barang dan jasa memungkinkan untuk melakukan diskriminasi harga. § Sifat permintaan dan elastisitas permintaan di masing – masing pasar haruslah sangat berbeda. § Kebijakan diskriminasi harga tidak memerlukan biaya yang melebihi tambahan keuntungan yang diperoleh tersebut § Produsen dapat mengeksploiter beberapa sikap tidak rasional konsumen. Chapter 5: Price Discrimination: Linear Pricing 4

§ First Degree Price Discrimination: Diskriminasi tingkat pertama dilakukan dengan cara menerapkan harga yang berbeda-beda untuk setiap konsumen berdasarkan reservation price (Willingness To Pay) masing-masing konsumen. § Syarat: perusahaan harus mengetahui reservation price masing- masing konsumen. § Contoh : seorang dokter memberlakukan tarif konsultasi yang berbeda-beda pada setiap pasiennya. • • • First Degree Price Discrimination dapat merugikan konsumen karena perusahaan mengambil surplus konsumen. First Degree Price Discrimination disebut juga sebagai perfect price discrimination karena perusahaan mengambil semua surplus konsumen (consumers’ surplus) Perusahaan memaksimumkan penerimaan total dan keuntungan dari setiap unit yang dijual. 5

§ Second Degree Price Discrimination: perusahaan tidak memiliki informasi mengenai reservation price konsumen, tetapi diskriminasi tetap dapat dilakukan. Di sini perusahaan tidak mendiskriminasi konsumen secara langsung, melainkan melalui diskriminasi produk. § Diskriminasi tingkat kedua ini dilakukan dengan cara menerapkanharga yang berbeda-beda pada jumlah batch produk yang dijual. § Contoh : perbedaan harga per unit pada pembelian grosir dan pembelian eceran. • Second Degree Price Discrimination juga dapat merugikan konsumen karena adaya surplus konsumen yang diambil perusahaan • Namun, di sini perusahaan hanya mengambil sebagian (tidak semua) surplus konsumen (consumers’ surplus) 6

§ Third Degree Price Discrimination: Perusahaan menerapkan harga yang berbeda untuk setiap kelompok konsumen berdasarkan reservation price masing-masing kelompok konsumen. § Perusahaan tidak mengetahui reservation price masing-masing konsumen, tapi mengetahui reservation price kelompok konsumen. § Kelompok konsumen dapat dibedakan atas lokasi, geografis, maupun karakteristik konsumen seperti umur, jenis kelamin, pekerjaan, dll. § Contoh : barang yang dijual di pedesaan di perkotaan akan berbda harganya. • Diskriminasi harga ditetapkan berdasarkan perbedaan elastisitas harga. • Permintaan yang lebih inelastis dikenakan harga yang lebih tinggi. 7

§ Two problems confront a firm wishing to price discriminate § identification: the firm is able to identify demands of different types of consumer or in separate markets § easier in some markets than others: e. g tax consultants, doctors § arbitrage: prevent consumers who are charged a low price from reselling to consumers who are charged a high price § prevent re-importation of prescription drugs to the United States § The firm then must choose the type of price discrimination § first-degree or personalized pricing § second-degree or menu pricing § third-degree or group pricing Chapter 5: Price Discrimination: Linear Pricing 8

§ Consumers differ by some observable characteristic(s) § A uniform price is charged to all consumers in a particular group – linear price § Different uniform prices are charged to different groups § “kids are free” § subscriptions to professional journals e. g. American Economic Review § airlines § the number of different economy fares charged can be very large indeed! § early-bird specials; first-runs of movies Chapter 5: Price Discrimination: Linear Pricing 9

§ The pricing rule is very simple: § consumers with low elasticity of demand should be charged a high price § consumers with high elasticity of demand should be charged a low price Chapter 5: Price Discrimination: Linear Pricing 10

§ Harry Potter volume sold in the United States and Europe § Demand: § United States: PU = 36 – 4 QU § Europe: PE = 24 – 4 QE § Marginal cost constant in each market § MC = $4 Chapter 5: Price Discrimination: Linear Pricing 11

§ Suppose that the same price is charged in both markets § Use the following procedure: § calculate aggregate demand in the two markets § identify marginal revenue for that aggregate demand § equate marginal revenue with marginal cost to identify the profit maximizing quantity § identify the market clearing price from the aggregate demand § calculate demands in the individual markets from the individual market demand curves and the equilibrium price Chapter 5: Price Discrimination: Linear Pricing 12

United States: PU = 36 – 4 QU Invert this: QU = 9 – P/4 for P < $36 Europe: PU = 24 – 4 QE Invert QE = 6 – P/4 for P < $24 At these prices only the US market is active Aggregate these demands Now both Q = QU + QE = 9 – P/4 for $24 < P < $36 markets are Q = QU + QE = 15 – P/2 for P < $24 Chapter 5: Price Discrimination: Linear Pricing active 13

Invert the direct demands P = 36 – 4 Q for Q < 3 P = 30 – 2 Q for Q > 3 Marginal revenue is MR = 36 – 8 Q for Q < 3 MR = 30 – 4 Q for Q > 3 Set MR = MC Q = 6. 5 $/unit 36 30 17 Price from the demand curve P = $17 Chapter 5: Price Discrimination: Linear Pricing Demand MR MC 6. 5 Quantity 15 14

Substitute price into the individual market demand curves: QU = 9 – P/4 = 9 – 17/4 = 4. 75 million QE = 6 – P/4 = 6 – 17/4 = 1. 75 million Aggregate profit = (17 – 4)x 6. 5 = $84. 5 million Chapter 5: Price Discrimination: Linear Pricing 15

§ The firm can improve on this outcome § Check that MR is not equal to MC in both markets § MR > MC in Europe § MR < MC in the US § the firms should transfer some books from the US to Europe § This requires that different prices be charged in the two markets § Procedure: § take each market separately § identify equilibrium quantity in each market by equating MR and MC § identify the price in each market from market demand Chapter 5: Price Discrimination: Linear Pricing 16

Demand in the US: PU = 36 – 4 QU Marginal revenue: MR = 36 – 8 QU $/unit 36 20 Demand MR MC = 4 4 Equate MR and MC 4 QU = 4 Price from the demand curve PU = $20 Chapter 5: Price Discrimination: Linear Pricing MC 9 Quantity 17

Demand in the Europe: PE = 24 – 4 QU Marginal revenue: MR = 24 – 8 QU $/unit 24 14 Demand MR MC = 4 4 Equate MR and MC 2. 5 QE = 2. 5 Price from the demand curve PE = $14 Chapter 5: Price Discrimination: Linear Pricing MC 6 Quantity 18

§ Aggregate sales are 6. 5 million books § the same as without price discrimination § Aggregate profit is (20 – 4)x 4 + (14 – 4)x 2. 5 = $89 million § $4. 5 million greater than without price discrimination Chapter 5: Price Discrimination: Linear Pricing 19

§ The example assumes constant marginal cost § How is this affected if MC is non-constant? § Suppose MC is increasing § No price discrimination procedure § Calculate aggregate demand § Calculate the associated MR § Equate MR with MC to give aggregate output § Identify price from aggregate demand § Identify market demands from individual demand curves Chapter 5: Price Discrimination: Linear Pricing 20

Applying this procedure assuming that MC = 0. 75 + Q/2 gives: (a) United States (b) Europe Price 40 (c) Aggregate Price 30 Price 40 40 30 30 DU 24 20 20 17 17 17 10 10 D 20 DE MR 10 MR U MC MR E 0 0 4. 75 5 10 0 0 1. 75 Quantity Chapter 5: Price Discrimination: Linear Pricing 5 Quantity 10 0 0 5 6. 5 10 15 20 Quantity 21

§ With price discrimination the procedure is § Identify marginal revenue in each market § Aggregate these marginal revenues to give aggregate marginal revenue § Equate this MR with MC to give aggregate output § Identify equilibrium MR from the aggregate MR curve § Equate this MR with MC in each market to give individual market quantities § Identify equilibrium prices from individual market demands Chapter 5: Price Discrimination: Linear Pricing 22

Applying this procedure assuming that MC = 0. 75 + Q/2 gives: (a) United States (b) Europe Price (c) Aggregate Price 40 30 Price 40 40 30 30 DU 24 20 20 20 DE 17 14 10 10 MRU 10 MC 4 0 MR 4 0 5 10 Quantity Chapter 5: Price Discrimination: Linear Pricing 0 4 MR E 0 1. 75 5 Quantity 10 0 0 5 6. 5 10 15 20 Quantity 23

§ Suppose that demands are linear § price discrimination results in the same aggregate output as no price discrimination § price discrimination increases profit § For any demand specifications two rules apply § marginal revenue must be equalized in each market § marginal revenue must equal aggregate marginal cost Chapter 5: Price Discrimination: Linear Pricing 24

§ Suppose that there are two markets with the same MC § MR in market i is given by MRi = Pi(1 – 1/hi) § where hi is (absolute value of) elasticity of demand Price is lower in the market with the higher demand elasticity § From rule 1 (above) § MR 1 = MR 2 § so P 1(1 – 1/h 1) = P 2(1 – 1/h 2) which gives Chapter 5: Price Discrimination: Linear Pricing 25

§ Often arises when firms sell differentiated products § hard-back versus paper back books § first-class versus economy airfare § Price discrimination exists in these cases when: § “two varieties of a commodity are sold by the same seller to two buyers at different net prices, the net price being the price paid by the buyer corrected for the cost associated with the product differentiation. ” (Phlips) § The seller needs an easily observable characteristic that signals willingness to pay § The seller must be able to prevent arbitrage § e. g. require a Saturday night stay for a cheap flight Chapter 5: Price Discrimination: Linear Pricing 26

§ Suppose that demand in each submarket is Pi = Ai – Bi. Qi § Assume that marginal cost in each submarket is MCi = ci § Finally, suppose that consumers in submarket i do not purchase from submarket j § “I wouldn’t be seen dead in Coach!” § “I never buy paperbacks. ” § Equate marginal revenue with marginal cost in each submarket It is highly unlikely that the difference in prices will equal the difference in marginal costs Ai – 2 Bi. Qi = ci Qi = (Ai – ci)/2 Bi Pi = (Ai + ci)/2 Pi – Pj = (Ai – Aj)/2 + (ci – cj)/2 Chapter 5: Price Discrimination: Linear Pricing 27

§ Impose restrictions on use to control arbitrage § Saturday night stay § no changes/alterations § personal use only (academic journals) § time of purchase (movies, restaurants) § “Crimp” the product to make lower quality products § Mathematica® § Discrimination by location Chapter 5: Price Discrimination: Linear Pricing 28

§ Suppose demand in two distinct markets is identical § Pi = A = BQi § But suppose that there are different marginal costs in supplying the two markets § cj = ci + t § Profit maximizing rule: § equate MR with MC in each market as before § Pi = (A + ci)/2; Pj = (A + ci + t)/2 § Pj – Pi = t/2 cj – ci § difference in prices is not the same as the difference in prices Chapter 5: Price Discrimination: Linear Pricing 29

§ Does third-degree price discrimination reduce welfare? § not the same as being “fair” § relates solely to efficiency § so consider impact on total surplus Chapter 5: Price Discrimination: Linear Pricing 30

Suppose that there are two markets: “weak” and “strong” The discriminatory price in the weak market is P 1 Price D 1 The maximum The uniform gain in surplus inprice in both the weak market is P U is G PU The discriminatory price in the strong market is P 2 Price D 2 The minimum loss of surplus in the strong market is L MR 2 PU P 1 MR 1 G L MC ΔQ 1 Chapter 5: Price Discrimination: Linear Pricing Quantity MC ΔQ 2 Quantity 31

Price D 1 Price discrimination cannot increase surplus unless it increases aggregate output PU Price D 2 MR 2 PU P 1 MR 1 G L MC ΔQ 1 Quantity MC ΔQ 2 Quantity It follows that ΔW < G – L = (PU – MC)ΔQ 1 + (PU – MC)ΔQ 2 = (PU – MC)(ΔQ 1 + ΔQ 2) Chapter 5: Price Discrimination: Linear Pricing 32

§ Previous analysis assumes that the same markets are served with and without price discrimination § This may not be true § uniform price is affected by demand in “weak” markets § firm may then prefer not to serve such markets without price discrimination § price discrimination may open up weak markets § The result can be an increase in aggregate output and an increase in welfare Chapter 5: Price Discrimination: Linear Pricing 33

Demand in “North” is PN = 100 – QN ; in “South” is PS = 100 - QS Marginal cost to supply either market is $20 North South $/unit Aggregate $/unit 100 Demand MC MC MC MR Quantity Chapter 5: Price Discrimination: Linear Pricing Quantity 34

Aggregate demand is P = (1 + )50 – Q/2 provided that both markets are served $/unit Aggregate Equate MR and MC to get equilibrium output QA = (1 + )50 - 20 Get equilibrium price from aggregate demand P = 35 + 25 P Demand MC MR QA Chapter 5: Price Discrimination: Linear Pricing Quantity 35

Aggregate Now consider the impact of a reduction in Aggregate demand changes Marginal revenue changes It is no longer the case that both markets are served $/unit PN Demand MC The South market is dropped Price in North is the monopoly price for that market Chapter 5: Price Discrimination: Linear Pricing MR MR' D' Quantity 36

Aggregate Previous illustration is too extreme $/unit MC cuts MR at two points So there are potentially two equilibria with uniform pricing At Q 1 only North is served at the monopoly price in North PN At Q 2 both markets are served at the uniform price PU PU Switch from Q 1 to Q 2: decreases profit by the red area increases profit by the blue area If South demand is “low enough” or Q 1 Q 2 MC “high enough” serve only North Chapter 5: Price Discrimination: Linear Pricing Demand MC MR Quantity 37

In this case only North is served with uniform pricing But MC is less than the reservation price PR in South So price discrimination will lead to South being supplied $/unit PN PR Price discrimination leaves surplus unchanged in North But price discrimination generates profit and consumer surplus in South So price discrimination increases welfare Chapter 5: Price Discrimination: Linear Pricing Aggregate Demand MC MR Q 1 Quantity 38

1 st Degree Price Discrimination § Suppose a monopolist faces demand P = 225 - Q and has marginal cost MC = 160. § Determine monopoly price. § Determine the effects of 1 st degree price discrimination versus monopoly pricing on consumer surplus and deadweight loss. Second-Degree Price Discrimination § Municipal water sales follow a declining block tariff, where lower prices are charged for additional units of consumption. Demand for water is given by P = 200 – Q and marginal costs are MC = 20. § Determine monopoly price. § What are the second-degree discrimination prices and quantities for the first and second blocks of water? § Determine the effects of 2 nd degree price discrimination versus monopoly pricing on consumer surplus and deadweight loss. 39

3 rd Degree Price Discrimination § Given aggregate demand for Students: Q=200 -(P/10 ) with inverse demand: P=2000 -10 Q § And let aggregate demand for Non-Students: Q=300 -(P/10 ) with inverse demand: P=3000 -10 Q § Suppose the monopolist cost function is C= 200 Q § What will the firm do? The firm has two options: § (1) Set two different prices, one for students and one for non-students § (2) Set only one price for everybody (No Discrimination) § (3) Compare the result obtained from (1) and (2) 40