Editing Price discrimination (section)

===Third degree: market segregation===
Third-degree price discrimination means charging a different price to a group of consumers based on their different elasticities of demand: the less elastic group is charged a higher price.<ref name=":12" /> For example, rail and tube (subway) travelers can be subdivided into commuters and casual travelers, and cinema goers can be subdivided into adults and children. Splitting the market into peak and off-peak use of service is common and occurs with energy and cinema tickets, as well as gym membership and parking.<ref>{{Cite web |date=2020-03-17 |title=8.4: Third-Degree Price Discrimination |url=https://socialsci.libretexts.org/Bookshelves/Economics/Book%3A_An_Interactive_Text_for_Food_and_Agricultural_Marketing_(Thomsen)/08%3A_Price_Discrimination/8.04%3A_Section_4- |access-date=2023-04-21 |website=Social Sci LibreTexts |language=en}}</ref>

In order to offer different prices for different groups of people in the aggregate market, the seller has to group its consumers. Prices must be set prices to match to buyer preferences.<ref>{{Cite journal |last1=Bergemann |first1=Dirk |last2=Brooks |first2=Benjamin |last3=Morris |first3=Stephen |date=2015-03-01 |title=The Limits of Price Discrimination |url=https://pubs.aeaweb.org/doi/10.1257/aer.20130848 |journal=American Economic Review |language=en |volume=105 |issue=3 |pages=921–957 |doi=10.1257/aer.20130848 |issn=0002-8282}}</ref> Sub-markets must be separated by time, physical distance, nature of use, etc. For example, back-to-school pricing may be lower than in other seasons. The markets must be structured so that buyers who purchase at the lower price in the elastic sub-market cannot resell at a higher price in the inelastic sub-market.