Sam Rodrigues’ Tryst with Price Discrimination (A): Degrees of Price Discrimination
On September 5th 2015, Sam Rodrigues (Sam) an employee at one of the leading Indian IT companies visited Mary Diagnostic Center (MDC) in Hyderabad to undertake various medical tests that his Consultant Physician had recommended the previous week. After filling up the required details in the form given to him, he paid ₹2000 for all the tests. He noticed people from various strata of the society walk into the diagnostic center for taking various diagnostic tests. Sam observed that the same services were charged differently for people from different income levels. Also, the charges were lower if the tests were recommended by a doctor from an affiliated hospital. He was perplexed why was there price discrimination for the same service/services from the same service provider.........
Sam and Tina’s Differential Pricing Experience
Sam had relocated to Hyderabad from Delhi in April 2015. He had joined at a senior position in an IT services firm. Sam had a very hectic lifestyle as he worked until late night almost daily and travelled frequently. While Sam enjoyed his work, his wife Tina Rodrigues (Tina) was quite worried about his health. She had been pestering him to go for a regular health checkup since the time he had turned 40 in June 2015, but Sam could not spare time to visit the doctor. However, upon Tina’s repeated requests, he agreed for a general health checkup appointment in Varun Hospitals (group of hospitals) – one of the leading hospital groups in Hyderabad............
Healthcare Prices for the Poor
Tina: I am happy you finally visited the doctor and we have registered for complete healthcare checkup tests. Moreover, we are able to get all the tests done at just INR 2000. I was thinking about the poor people for whom even `2000 is a very big amount. We are spending INR 2000 for preventive healthcare checkup. The poor will definitely not take these tests. They must be visiting the doctor only when they encounter some health problems.
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Assignment Questions
I. What do you understand by price discrimination? What are the advantages and disadvantages of price discrimination?
II. What are the types and the three degrees of price discrimination? Illustrate the three degrees of price discrimination with the help of caselet facts. Who would benefit under each of the three degrees of price discrimination?
III...............
Exhibits
Exhibit I: Tariff Card based on Income Levels at Varun Hospitals
Exhibit II: Price Details of Individual Tests and ‘Healthy at 40’ Package