Loyalty plans offered by booksellers can be viewed as a form of:
A) a public good because everyone benefits from its use.
B) contract manipulation, charging prices that mimic monopolies.
C) price discrimination, offering lower prices to people that are more price sensitive and higher prices to everyone else.
D) a price ceiling, creating an artificial shortage of top-selling books.

Question

Quizplus · Accepted Answer

Loyalty plans offered by booksellers are a form of price discrimination because they offer lower prices to price-sensitive customers (loyalty members) and higher prices to non-members. This allows the seller to capture more consumer surplus from non-members while still catering to the needs of price-sensitive customers.

Loyalty Plans Offered by Booksellers Can Be Viewed as a Form