Nathan and Terese are debating the pricing strategy of several airlines. Nathan

Question

Nathan and Terese are debating the pricing strategy of several airlines. Nathan argues, "When airlines restrict discounted tickets to people who book well in advance and stay over on a Saturday, it is not price discrimination, because the restrictions have nothing to do with individual buyers' willingness to pay." However, Terese says, "The airlines' stay-over restrictions are a form of price discrimination, because they roughly split the market into two separate groups that are willing to pay two different amounts."

Explanation / Answer

Terese

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