Editing Price discrimination (section)

== Types ==
Within the broader domain of price differentiation, a common classification dating to the 1920s, is:<ref name="Shapiro1999-392">{{cite book |author1=Carl Shapiro |url=https://archive.org/details/informationrules00shap |title=Information Rules: A Strategic Guide to the Network Economy |author2=Hal Varian |publisher=Harvard Business School Press |year=1999 |isbn=978-0-87584-863-1 |page=[https://archive.org/details/informationrules00shap/page/39 39] |url-access=registration}}</ref><ref name="BelleflammePeitz2010-1962">{{cite book |author1=Paul Belleflamme |url=https://books.google.com/books?id=nmUcldoQkagC&pg=PA196 |title=Industrial Organization: Markets and Strategies |author2=Martin Peitz |publisher=Cambridge University Press |year=2010 |isbn=978-0-521-86299-8 |page=196}}</ref>

* "Personalized pricing" (or first-degree price differentiation) – selling to each customer at a different price; this is also called [[Personalized marketing|one-to-one marketing]].<ref name="Shapiro1999-392" /> The optimal incarnation of this is called "perfect price discrimination" and maximizes the price that each customer is willing to pay.<ref name="Shapiro1999-392" /> As such, in "first degree" price differentiation the entire consumer surplus is captured for each individual.<ref name=":02">{{Citation |last1=Mance |first1=Davor |title=Personalized Medicine and Personalized Pricing: Degrees of Price Discrimination |date=2019 |work=Personalized Medicine in Healthcare Systems |pages=171–180 |url=http://dx.doi.org/10.1007/978-3-030-16465-2_14 |access-date=2023-04-21 |place=Cham |publisher=Springer International Publishing |doi=10.1007/978-3-030-16465-2_14 |isbn=978-3-030-16464-5 |s2cid=157911717 |last2=Mance |first2=Diana |last3=Vitezić |first3=Dinko}}</ref>
* "Product versioning"<ref name="Phillips2005-742" /><ref name="HayesMiller20112">{{cite book |author1=David K. Hayes |url=https://books.google.com/books?id=coWkoyJeHIEC&pg=PA115 |title=Revenue Management for the Hospitality Industry |author2=Allisha Miller |publisher=John Wiley and Sons |year=2011 |isbn=978-1-118-13692-8 |page=115}}</ref> or simply "versioning" (or "second-degree" price differentiation) – offering a [[product line]]<ref name="Shapiro1999-392" /> by creating slightly differentiated products for the purpose of price differentiation,<ref name="Phillips2005-742" /><ref name="HayesMiller20112" /> i.e. a vertical product line.<ref name="Phillips2005-822">{{cite book |author=Robert Phillips |url=https://books.google.com/books?id=InuQPrC6GtQC&pg=PA82 |title=Pricing and Revenue Optimization |publisher=Stanford University Press |year=2005 |isbn=978-0-8047-4698-4 |pages=82–83}}</ref> Another name given to versioning is "menu pricing".<ref name="BelleflammePeitz2010-1962" /><ref name="PepallRichards20112">{{cite book |author1=[[Lynne Pepall]] |url=https://books.google.com/books?id=_e4utSCRU30C&pg=PA87 |title=Contemporary Industrial Organization: A Quantitative Approach |author2=Dan Richards |author3=George Norman |publisher=John Wiley and Sons |year=2011 |isbn=978-1-118-13898-4 |page=87}}</ref>
* "Group pricing" (or "third-degree" price differentiation) – dividing the market into segments and charging a different price to each segment (but the same price to each member of that segment).<ref name="Shapiro1999-392" /><ref name="Phillips2005-782">{{cite book |author=Robert Phillips |url=https://books.google.com/books?id=InuQPrC6GtQC&pg=PA78 |title=Pricing and Revenue Optimization |publisher=Stanford University Press |year=2005 |isbn=978-0-8047-4698-4 |page=78}}</ref> This is essentially a heuristic approximation that simplifies the problem in face of the difficulties with personalized [[pricing]].<ref name="BelleflammePeitz2010-1962" /><ref name="Phillips2005-772">{{cite book |author=Robert Phillips |url=https://books.google.com/books?id=InuQPrC6GtQC&pg=PA77 |title=Pricing and Revenue Optimization |publisher=Stanford University Press |year=2005 |isbn=978-0-8047-4698-4 |page=77}}</ref> Typical examples include [[Student discount|student]]<ref name="Phillips2005-782" /> and senior discounts.