- Elgar original reference
Edited by André de Palma, Robin Lindsey, Emile Quinet and Roger Vickerman
22 Price discrimination Simon P. Anderson and Régis Renault INTRODUCTION Whenever we take a trip by train or by plane, we are often well aware that the price we paid was quite different from that paid by our fellow passengers with whom we are sharing the carriage or cabin. We can bemoan this situation, if we booked late and do not qualify for an age discount and our ticket was one of the more expensive ones or perhaps be pleased at having gotten a good price. The different prices are illustrations of what economists call discriminatory pricing. This seems to be a textbook case where a service which is identical (same journey, same date, same time, same comfort class) is sold at different prices.1 Looking closer, it is a little oversimplified to claim that all travelers have actually received the same level of service. Less expensive tickets are often associated with numerous restrictions which clearly indicate a lower level of service. It is often necessary to buy the ticket a long time in advance, with restrictive conditions on cancellation and reimbursement. The traveler can then enjoy the same service as she would have had if she had paid full price – unless, of course, her plans change at the last minute. However, to get the cheap fare she has to accept some risk, had she been obliged to change or cancel her ticket, or indeed she might have had to put up with some inconvenience due to having not changed...
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