Economic Issues and Price Discrimination - Essay Example

Economic Issues Price discrimination entails charging different prices to different s depending on their willingness to pay. The main reason for price discrimination is for firms to be able to rack in more revenue owing to different prices for products produced at similar costs (Dobson and Goddard, 168). Charging $150 per ticket for 50-yard-line tickets in the lower deck and $50 per ticket for upper-deck tickets overlooking the end zone by a professional team is price discrimination. This type of discrimination is third-degree price discrimination since third-degree price discrimination involves charging different groups of customers different prices.

This is true owing to the two groups of spectators are charged $ 150 for lower-yard customers and $ 50 for upper-deck customers in professional sports stadia (Dobson and Goddard, 169). The discrimination method used in this case is the location of the seats of the spectators in the stadium resulting in the different prices being charged for different spectators exemplifying a case of price discrimination. 2. Limiting property right on new buildings to 20 years will discourage investment in new buildings, as this will limit the benefits associated with investment in new buildings.

The benefits that would be accrued from the investment are property rights forming the main reason to augment the incentive to invest in new buildings. These advantages will be reduced when property rights are limited to 20 years reducing the incentive for investment in new buildings. The need to have property rights on new buildings spanning more than 20 years augments the incentive for people to invest in new buildings as they can be able to access rights from their investment in buildings increasing the number of houses being built by investors.