Price Discrimination: Common or Illegal?

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Is price discrimination common practice or illegal? Prove it.

Team D feels that price discrimination is not a common practice, even though it does occur frequently. Prices are based upon the price elasticity of demand in each given market, but for price discrimination to be effective the national markets must be separate and their price elasticities of demand must differ. Although we feel it is not a common practice price discrimination is not always illegal. According to the Robinson-Patman Act in 1936, five elements must be present: 1. Discrimination - charging various prices to various customers. If the price difference is because of a discount or allowance made to customers and some do not take advantage of it, there is no discrimination. 2. Sales to Two or More Purchasers - the different prices must be charged on "reasonably contemporaneous sale to to two or more purchasers". Actual sales and agreements must exist. This does not include annual or semi-annual sales. 3. Goods - Robinson-Patman appies to the sale of goods, not services. 4. Like - Grade and Quality - the goods involved must be the same. If items are similar, but not identical, there is no discrimination. 5. Reasonable Probability of Competitive Injury - this occurs when one supplier drops his prices below cost in order to put the competitor out of business. After the competitor is gone, the first supplier raises his prices.

Price discrimination is part of the commercial and business world. Movie theaters, magazines, computer software companies, and thousands of other businesses have discounted prices for students, children, or the elderly. One important note though, is that price discrimination is only present when the exact same product is sold to different people for different prices. For instance airline tickets can vary going to and from the same destinations. Many people have felt the effects of high prices from such areas as fuel and medical costs and believe that price...
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