price discrimination
Price discrimination is charging different customers different prices for essentially the same thing — not because it costs more to serve them, but because they're willing to pay more. The airline seat next to you might have cost the passenger half what you paid, or twice as much. A student gets the cinema ticket cheaper; a business traveller pays a fortune for the flexible fare. The seller is quietly sorting buyers by how much each will bear, and squeezing more out of each group than a single uniform price ever could.
Economists sort it into three degrees. First-degree (perfect) price discrimination: charge each buyer the very most they'd pay — the haggling bazaar ideal, rare in pure form but approached by personalised online pricing. Second-degree: charge by quantity or version, letting buyers sort themselves — bulk discounts, the cheap-versus-premium tiers of software, the small-medium-large popcorn that nudges you to "upgrade." Third-degree: charge different identifiable groups different prices — student and senior discounts, peak-versus-off-peak fares, the same drug priced differently across countries. For any of this to work, the seller needs three things: some market power (a price taker can't do it), a way to tell groups apart, and a way to stop cheap buyers from reselling to dear ones (you can't resell your student haircut).
Is it good or bad? Honestly, it depends, and economists genuinely disagree. It transfers money from buyers to the seller and can feel deeply unfair ("why did I pay more?"). Yet it can also expand output and serve people a single high price would have shut out — the student who only gets to see the film because of the discount, the cheap off-peak train that fills otherwise empty carriages, the poorer country that gets the medicine at all. So price discrimination is one of those ideas that is neither villain nor hero: it raises profit, it can raise total output, and whether ordinary people end up better or worse off varies case by case.
Two people on the same flight, in the same class, may have paid wildly different fares: one booked months ahead off-peak, the other bought a flexible ticket the night before a meeting — the airline read their differing willingness to pay and charged accordingly.
Price discrimination needs market power, a way to separate buyers, and a barrier to resale — without all three it unravels.
"Discrimination" here is a technical term about prices, not a moral judgement about protected groups. It is mostly legal, though some forms (e.g. by race) are banned, and personalised algorithmic pricing is raising new fairness questions.