Price Discrimination- a new approach followed by Uber

The US gigantic ride-sharing service Uber follows a unique way of calculating the fare amount and it is based on a list of factors. On the other side of the flip, this calculation has been met with the mild outrage which is popularly known to be the “price discrimination”. This new concept mainly calculates the difference between the value of the customer that pretends on a product and how much amount they actually pay. The enterprises execute this by charging different prices to different people and capitalizing the differences in the context of willingness to pay the amount. If the ride-sharing Company Uber new pricing concept enters the market or if it reduces the customer waiting times then the price discrimination could increase the society’s overall welfare.The Price Discrimination is the method of charging different types of consumers different prices for the same product or the service. Even though the mechanism is a different one, the main aim is to exploit the different WTP (Willingness to Pay) between the customers and thereby increase the profit. WTP initially describes the maximum amount for a customer that would pay for a specific product or a service. It represents a chance so that the organizations may exploit through the price discrimination. There are major three types of price discrimination such as first degree, second degree, and the third degree. This first one mostly generates the profit and it involves each customer paying the maximum price. The Second-degree price discrimination involves giving a discount for a huge list of purchases. The Third Degree involves of selling the same service to different segments of a market which are based on the willingness to pay.

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