> The purpose of price discrimination is to reduce the share of gains-from-trade received by consumers to zero.
Even from a cynical perspective, that is incomplete, since it doesn't capture another purpose--which you mentioned in passing--of "better a little profit than no profit", where a lower price is offered to permit trades that would otherwise not occur.
> Given this, it's not really clear why price discrimination is supposed to be beneficial.
Leaving aside whether a net-effect or national policy is good or bad, surely you can imagine some individual cases where "price discrimination" is used for good, right?
Suppose the local baker wants to offer extra bread to the poor for a symbolic pittance, without impacting the price he usually sells it at to regular customers. It is both a charitable act and also pricing-discrimination: "The really poor" are identified, and a separate price of $0.25/loaf is offered.
> Lower rates for bulk purchases is not an example of price discrimination.
Huh? Bulk-rates are literally a textbook example of price discrimination, albeit usually with the qualifier of "second-degree." [0]
If you still think it shouldn't count, then what's the rationale that sets it apart?
It can't be based on "the conditions were publicized in advance", because if that's how it works then "rich people pay more" would magically cease being price discrimination just because I put it on a sign.
Another possibility is "because it represents actual cost differences to the vendor", but I don't see that as very compelling, since (A) sometimes those don't meaningfully exist like with "digital goods" and copyright licenses and (B) that would excuse certain kinds of price-discrimination as long as the vendor can argue a smidgen of logistical difference in the deals.
> If you still think it shouldn't count, then what's the rationale that sets it apart?
There's no discrimination involved. "Rich people pay more" is a pricing difference based on the identity of the customer. "Buy 300, get 100 free" is open to anyone.
Take the textbook example of what makes price discrimination difficult: the ability of rich people to use purchasing agents. At Bakery "Soak The Rich", that would be a desirable approach - you ask someone to buy your bread for you, they pay a low price, and then they turn the bread over to you.
At Bakery "Ask About Our Bulk Discounts", that approach would make no sense.
The other notable thing about bulk discounts is that they represent charging lower prices to customers with higher willingness to pay.
> It is literally a textbook example of price discrimination
I've confirmed that you're right about this. But the economics of bulk discounts are radically different from other forms of price discrimination, so all I can really say here is that they should be treated separately.
Principles of Economics says that "Quantity discounts are
often a successful way to price discriminate because customers' willingness to pay
for an additional unit declines as they buy more units", but this analysis has some flaws, most notably that bulk discounts do not take any account of how many units a customer already owns.
The book also notes that price discrimination cannot exist in a competitive market, which conflicts with the idea that bulk discounts are an example of price discrimination. This is because of the logistical differences you mention - while they don't necessarily exist everywhere, they do exist in most transactions (including with digital goods, where payment processing fees mean that selling 1 item 100 times is far more expensive than selling 100 items at once), and they can easily sustain bulk discounts in a competitive market.
> Even from a cynical perspective, that is incomplete, since it doesn't capture another purpose--which you mentioned in passing--of "better a little profit than no profit", where a lower price is offered to permit trades that would otherwise not occur.
But it's not incomplete. As I mentioned above, the lower price is still intended to allow for zero consumer surplus. The trade that occurs under the system of price discrimination, when it wouldn't have occurred without it, benefits the customer to only a negligible degree, and this is by design.
Even from a cynical perspective, that is incomplete, since it doesn't capture another purpose--which you mentioned in passing--of "better a little profit than no profit", where a lower price is offered to permit trades that would otherwise not occur.
> Given this, it's not really clear why price discrimination is supposed to be beneficial.
Leaving aside whether a net-effect or national policy is good or bad, surely you can imagine some individual cases where "price discrimination" is used for good, right?
Suppose the local baker wants to offer extra bread to the poor for a symbolic pittance, without impacting the price he usually sells it at to regular customers. It is both a charitable act and also pricing-discrimination: "The really poor" are identified, and a separate price of $0.25/loaf is offered.
> Lower rates for bulk purchases is not an example of price discrimination.
Huh? Bulk-rates are literally a textbook example of price discrimination, albeit usually with the qualifier of "second-degree." [0]
If you still think it shouldn't count, then what's the rationale that sets it apart?
It can't be based on "the conditions were publicized in advance", because if that's how it works then "rich people pay more" would magically cease being price discrimination just because I put it on a sign.
Another possibility is "because it represents actual cost differences to the vendor", but I don't see that as very compelling, since (A) sometimes those don't meaningfully exist like with "digital goods" and copyright licenses and (B) that would excuse certain kinds of price-discrimination as long as the vendor can argue a smidgen of logistical difference in the deals.
[0] https://www.oxfordreference.com/display/10.1093/oi/authority...