Matt and Jadrian discuss the concept of price discrimination and how it’s taught in economics classrooms. They highlight some real-world examples like student discounts, movie ticket pricing, and differential college tuition to highlight how businesses maximize profits by charging different prices to different customers. Jadrian shares his excitement about teaching new methods like the hurdle approach, which explains how businesses determine discount levels to attract customers. Tune in for a fun and relatable look at how pricing strategies impact everyday life!
In this episode, we discuss:
How price discrimination works to charge different prices to different customers for the same product.
Real-world examples of price discrimination
The concept of two-part tariffs that combine fixed fees with usage-based charges.
Why teaching real-world applications of pricing strategies helps make economics relatable and engaging for students.
And a whole lot more!
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Some show notes:
This episode was recorded right before Thanksgiving Break, which means Matt & Jadrian are busy getting some final tasks completed before they log off for the break. Since Jadrian is still hard at work getting ready for an upcoming conference, he went with a refreshing cucumber watermelon beverage from a new dining hall that recently opened near his office. Matt was busy working at home, which meant he got to enjoy a hoppy Troeg’s Hopora IPA.
This episode dives into teaching price discrimination, a pricing strategy where businesses charge different prices to different groups for the same product. This is one of those concepts that really resonates with students because of all its real-world applications. Examples like student discounts, personalized tuition, and matinee movie pricing help students understand how companies tailor prices based on customers’ willingness to pay.
Matt and Jadrian do touch on the ethics of price discrimination, noting how students often question whether charging different prices is "fair"—even when they are the ones frequently benefiting. Jadrian was curious why they seemed concerned about it when they are the ones who often benefit from lower prices, but they both wondered how big of a discount would someone need to get before it upset the people not getting a discount.
This week’s pop culture references:
Jadrian shares a funny scene from Netflix's After Life starring Ricky Gervais. In the clip, Gervais's character takes his nephew out to eat and becomes frustrated when the waitress refuses to let him order a kid’s meal for himself. Despite his argument that he simply wants a smaller portion, the restaurant insists the meal is for children only. Quick on his feet, Gervais orders two kid’s meals for his nephew, leaving the waitress—and his nephew—stunned.
Matt’s first contribution is The Airport Song from the musical Honeymoon in Vegas, which cleverly showcases price discrimination in airline pricing. The song humorously explores the many pricing options for traveling from Hawaii to Las Vegas, emphasizing how airlines charge different amounts based on factors like timing, route, and customer urgency.
Matt’s second pop culture pick is the critically acclaimed movie Conclave. The film, which revolves around the election of a new Pope, is rich with strategic decision-making scenarios, particularly in the context of voting games. Matt highlights how the plot provides fascinating examples of game theory, as cardinals navigate alliances, preferences, and strategic voting to influence the outcome.
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