Hintaerottelun

Hintaerottelu, a Finnish term, translates to price discrimination in English. It refers to the practice of selling the same or very similar products or services to different customers at different prices, where the price difference is not attributable to differences in the cost of production or delivery. This strategy is employed by businesses to maximize profits by extracting more value from consumers who are willing to pay more.

There are several common forms of hintaerottelu. First-degree price discrimination, also known as perfect price discrimination, involves charging each customer the maximum price they are willing to pay. This is rarely achievable in practice. Second-degree price discrimination occurs when prices vary based on the quantity consumed, such as bulk discounts or tiered pricing structures. Third-degree price discrimination involves segmenting the market into groups based on observable characteristics like age, student status, or location, and charging different prices to each group. Examples include student discounts or senior citizen fares.

For hintaerottelu to be successful, several conditions must generally be met. The seller must have some degree of market power, meaning they are not in a perfectly competitive market. They must also be able to prevent arbitrage, where customers who buy at a lower price can resell to those who would otherwise pay a higher price. Finally, the seller needs to be able to identify and segment different customer groups based on their willingness to pay. While potentially profitable, price discrimination can raise concerns about fairness and equity, and in some jurisdictions, certain forms of it may be subject to legal regulation.