Price Discrimination: Micro Economics Assignment

Price Discrimination: Micro Economics Assignment Words: 757

This paper analyzes the sale of software products in Australia higher than their Other counterparts in different countries such as America. This paper will also establish if the practice is justified in the Australian market and if technology companies have considered all the regulations in doing so. Introduction The Australian case study can be evaluated with the use of the price discrimination theory, as one will realize the reason why the same goods or services can have different prices in different regions. This paper will explain more of this theory with the use of

Australia’s case study as it also explains the outcome of the meeting and if the meeting will be fruitful to the Australians computer users in conjunction with the losers and the gainers in this practice. Price Discrimination is ‘a situation in which different groups of consumers are charged different prices for the same good’ (Taylor ; Frost, 2009, p. 224). Numerous businesses have different charges for their products and services in different regions. The effect for this kind of behavior in the market has been realized by different business entities as it is nowadays practiced in almost every market.

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However, the Australian market has had the experience harshly as they are charged more than double the price of the commodity or services (Grumman ; Obsolete, 2003). This type of practice is referred to as price discrimination or yield management where a company decides to charge different prices for its commodity to different groups whereas the reason is not based on cost. The Australian case is not different as most of the scholars in pricing in Australia especially Mr.. Husks and Daniel Males discovered that the Australian market is not different form other markets in he world.

The companies claim that the Australian market is still young and growing hence different pricing; however, the scholars have proved this. The percentage of the individuals using the services in Australia is the same as the percentage in America. On the other hand, the companies are not justified to carryout price discrimination, as there are certain aspects that have to be considered for them to make the Australian consumers suffer. Two conditions should be in place for the practice to take place including difference found in price elasticity in the demand between different markets.

This implies that for the technology companies to be justified in hiking the prices in Australia, the price elasticity of demand should be different between the two consumers (Samuelsson ; Marks, 2003). This will later enable the technology companies to charge the areas having high prices with a price elasticity demand, which is higher, and the areas with the more elastic demand will be charged lower. This will ensure that the company collects its profit and total revenue as it achieves higher in its level of surplus production.

The companies would want to maximize their profits as they seek for the marginal revenue, which is equal to the marginal cost in the different markets. The second condition is based on the existence of barriers from the consumers who are used to switching from one supplier to another. The companies should be in a position of preventing the switching of the consumers or the market seepage by the consumers. This is a process whereby the consumers who get the commodity at a lower price will sell it in the market of the individuals who buy the commodity expensively Samuelsson ; Marks, 2003).

This implies that the companies should be able to come up with unique products for each region. As in this case, the technology companies should be able to come up with products, which are tailored for the Australian market only. These products should also be sold into the market at different times so that it will not be in the same market as in the other region. This shows that Australian parliamentary committee is justified to call the technology companies in relation to the high pricing of their products.

This is also established, as technology companies have not considered the two conditions for them to practice price discrimination in Australia (Grumman ; Obsolete, 2003). The company sees have not given Australia different commodity from those from other parts of the world and the Australian market elasticity of demand is the same as that of America. Therefore, the Australian government should control the prices of these products in their countries and demand for lowering of the prices of these commodities.

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Price Discrimination: Micro Economics Assignment. (2021, Sep 05). Retrieved December 10, 2022, from