5 sats \ 2 replies \ @Undisciplined 3 Jun \ on: What do you think about different prices for everyone? econ
Price discrimination (the technical term for what you're describing), is basically a way for producers to capture more of the profits from their activities.
Normally, profits (economic not accounting) are split between consumer surplus and producer surplus. If producer surplus increases at the expense of consumer surplus, economic metrics will look better, but consumers will feel worse off.
Wendys tried this a year or so ago and it failed. They wanted to do "surge pricing", but it just doesn't work in their industry.
Surge pricing can work for something like Uber because often times the "surge" coincides naturally with either high income customers (ie. wall street at 5pm) or with times where the customer was engaging in high discretionary spending (ie. leaving a busy concert at 10pm on a Friday).
Trying to "surge price" a hamburger at lunch for regular workers is a non-starter. There are too many other options that they will just walk out of door.
reply
When you sell a highly substitutable and fairly low quality product, like Wendy's does, this won't work. The demand curve is very flat for fast food hamburgers, as is the supply curve.
The idea of individualized price discrimination through the apps might work better, though. No doubt there are more affluent people who eat fast food and are less price sensitive than the average consumer.
reply