Large airlines might have come close to perfecting price discrimination by creating an incredibly complex pricing system designed to fill as many seats as possible. But once the Internet made it easier for flyers to compare fares, the strategy fell apart. Southwest Airlines founder Herb Kelleher said, "The high-fare, last-minute, walk-up business customer" is "gone forever." Kelleher is referring to what economists would call:

Question

Presley Shelton

Business

25 October, 18:10

Large airlines might have come close to perfecting price discrimination by creating an incredibly complex pricing system designed to fill as many seats as possible. But once the Internet made it easier for flyers to compare fares, the strategy fell apart. Southwest Airlines founder Herb Kelleher said, "The high-fare, last-minute, walk-up business customer" is "gone forever." Kelleher is referring to what economists would call:

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Alonso Barnett · Answer 1

Third degree price discrimination

Explanation:

Third degree price discrimination is when different customers are charged different price when purchasing the same product. The customers are differentiated on the basis of sex, age, location, and time of use.

In this scenario where large airlines create an incredibly complex pricing system designed to fill as many seats as possible, the last customer that comes to buy a ticket is charged at a higher price.

This exemplifies a third degree price discrimination that is based on time of use.

However the internet has made it easier to compare prices resulting in failure of this strategy.