Chapter 15

A Monopoly on Lobster Dinners in Maine?

The Fisherman’s Friend restaurant is the only restaurant in Stonington, Maine, so even though lobster prices reached a 40-year low in 2012, diners at the restaurant did not pay lower prices for their lobster meals. The Fisherman’s Friend restaurant had a monopoly on selling seafood dinners in Stonington.

Chapter 16

Getting into Walt Disney World: One Price Does Not Fit All

Walt Disney World and many other firms charge consumers different prices based on their willingness to pay for their products. Disneyland and Disney World charge a high price for admission, but rides inside the parks are free. Other firms use a similar pricing strategy to increase their profits.

Dicussion Question：

Once a plane has taken off for its destination, any seat not sold on that flight will never be sold. In addition, the marginal cost of flying one additional passenger is low. This gives airlines an incentive to manage prices so that as many seats as possible are filled on each flight. Airlines will maximize their profits by charging business travelers higher prices than leisure travelers, but airlines need to determine who is a business traveler and who is a leisure traveler. Some airlines identify business travelers by requiring people who buy at the leisure price to buy 14 days in advance and stay at their destination over a Saturday night. Anyone unable to meet these requirements must pay a much higher price. The airlines also use computer models to calculate a suggested price each day for each seat. The practice of continually adjusting prices to take into account fluctuations in demand is called yield management.

Would you adopt the same practice in an airline that you owned? Provide an explanation to support your argument.

Can you provide an example of another industry that practices price discrimination?