One Example of Price Discrimination Occurs in the Publishing Industry

question 65

Essay

One example of price discrimination occurs in the publishing industry when a publisher initially releases an expensive hardcover edition of a popular novel, and later releases a cheaper paperback edition. Use this example to demonstrate both the benefits as well as the potential pitfalls of a price discrimination pricing strategy.

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Definitions:

Porter's Five Forces

A framework analyzing a business's competitive environment based on five key forces: competitive rivalry, supplier power, buyer power, the threat of substitution, and the threat of new entrants.

Zero-Sum Game

A situation in which one participant's gains or losses are exactly balanced by the losses or gains of the other participants.

Profitability Expense

A cost incurred by a business that is considered when calculating its profitability, often relating to the operational, production, or administrative aspects of the company.

Rivalry Among Firms

The competition between businesses in the same industry to gain increased revenue, market share, and customer loyalty.