In a nutshell, price discrimination lets you sell an identical good or service to different users at different prices. Most markets let sellers discriminate to increase competition. Sellers want buyers to pay as much as they can. The buyer’s ability to pay different prices is called elasticity of demand.
Sellers implement price discrimination by various methods. Sometimes they categorize buyers based up on age, time, and location. Sometimes they let buyers choose their own category. Sometimes buyers may have to negotiate individually. Used car sales are a good example of a market where different buyers end up paying different prices. In the case of price comparison engines, we try to find the best price for a desirable product by aggregating results. Price comparison engines aggregate millions of deals across a vast geographical area. Different products have different geographic ranges. For example cellphones vs books have different markets spans. Cell phones use different technologies in different countries, but text books may have same contents across different continents. Sometimes you end up paying less for a text book when it is shipped from UK (including shipping)!
Do you think this price model is amazing? To understand price discrimination better, a couple of good points to start may be Price Discrimination on Wikipedia and Marketing engineering: computer-assisted marketing analysis and planning on Google Books.
I hope you enjoy reading my blog. Tomorrow, I will talk about branding and attribute preferences. And yeah, do not forget to post a comment. Your feedback is valuable 
Filed under: Basics of Price Variance, Price Matching Engines Tagged: | economics, Price Comparison, Price Discrimination, Price matching, pricing
