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Discriminatory Pricing

· Price discrimination is charging different customers different prices for the same product or service.

Robinson-Patman Act prohibits price discrimination where the effect may be to lessen competition.

· Discriminatory pricing cases usually deal with businesses in the distribution channel rather than the final consumer.

Volume discounts are allowed only if the discounts are available to all competing customers.

Some legal pricing strategies that might be called discriminatory pricing are:

· Different customers paying different fees based on demographic differences

o Ex: Senior citizens and students paying less at the movies

· Different models of the same product costing more, even though it may not have cost more to make.

· Different locations priced differently based on consumer preference.

o Ex: Theater seats

· Prices varying by season

o Ex: Casinos in Las Vegas, Airfares, Hotels

Misleading Pricing:

· Sales pricing:

· High-low pricing

· Consumers relying on reference prices

· Most enforcement conducted by state agencies.

· Manufacturer's suggested retail price

FTC'S GUIDELINES

An advertiser may claim a savings from its own former price if it can demonstrate that its former price is a bona fide or genuine price; that is, a price from which a reduction represents a genuine savings to the customer.

DFC Methods: Capital Budgeting

Capital budgeting