Definition
- Separable groups
- Separable groups are buyers the firm can sort by their price elasticity of demand and tell apart, so it can charge the inelastic group more.
Example
Can you think of an example of separable groups?
Commuters must reach work on time, so their demand for peak trains is inelastic; leisure travellers can choose their train, so theirs is elastic. The company charges £60 for a peak return and £25 off-peak on the same route.
Test yourself
Can you name the three conditions for price discrimination?