Introduction

As other service industries, according to the consumers’ personal, cinema delimit different movie tickets, and charge three different prices for its customers: one for adults, one for students, and one for seniors. The cinema set up different prices for the same movie, its purpose is to pursue a maximum profit. Elderly people and students are charged at low prices for their large elastic demand, and the cinema charge adults by higher ticket prices due to adults’ smaller elastic demand. The economic principle behind this phenomenon is namely the price discrimination, providing same goods or services to customers implement different prices. Firstly, this essay will discuss the definition of price discrimination and its forms. Then, it will analyze the reasons why a cinema charges three different prices for its customers from the perspective of price discrimination. Finally, it will evaluate the cinema’s three different prices policy for customers.

Price discrimination and its forms

Price discrimination is to establish basic needs, detente demand fluctuation and stimulating consumption. The enterprise provides the same kind of products to different customers at different prices, and it meets different requirements of customers. Price discrimination could be subdivided in degrees depending on market and the ability of consumers paying high or low price, namely the ability of elastic demands of consumers (Corsetti & Dedola 2005). Such price discrimination is implemented in three degrees. The first degree discrimination is the most extreme form of price discrimination. In this form, the seller is not decided to differentiate to different consumption ability of various groups. The second degree discrimination is pricing general according to consumer purchase quantity size. The third degree discrimination is the most common form of difference pricing. According to the different demand of the price elasticity, it could differentiate customers or market. Generally, on big price elasticity market, it is a low price, and for small price elasticity market, the price a little higher. In addition, the third degree, can also according to the price difference between the different geographical position and external image of products. Enterprise in different locations, and products and services coming from different location make the different prices, including the retail business (Cataluńa 2004). The regional prices of drugs are different by the pharmaceutical firms across Central American countries (Rojas 2009).