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Gender-based price discrimination is the practice of offering identical or similar services and products to men and women at different prices when the cost of producing the products and services is the same. [52] In the United States, gender-based price discrimination has been a source of debate. [53]
There are a number of different studies on the price disparities between personal care products and services that are marketed towards females and males. For example, the New York City Department of Consumer and Worker Protection (DCA) conducted a study of prices of goods in New York City across five industries, including personal care products ...
Examples include items like: sand, gravel, and aggregate used in construction. [17] With the advent of the Internet, price, service and support are often the only contact points with the customer. Identical products shipped across state lines with no tax have no other differentiators.
In economics, the law of one price (LOOP) states that in the absence of trade frictions (such as transport costs and tariffs), and under conditions of free competition and price flexibility (where no individual sellers or buyers have power to manipulate prices and prices can freely adjust), identical goods sold at different locations should be sold for the same price when prices are expressed ...
Only if the two products satisfy the three conditions, will they be classified as close substitutes according to economic theory. The opposite of a substitute good is a complementary good, these are goods that are dependent on another. An example of complementary goods are cereal and milk. An example of substitute goods are tea and coffee.
Private enterprise will use product segmentation strategies to legally maximise profit. This often includes varying service levels, pricing and product features to improve the so-called "fit" to the local marketplace. However, this segmentation may mean identical products at higher prices. This can be termed price discrimination. [7]
Setting identical prices above unit cost leads to a destabilizing incentive for each firm to undercut the other, aiming to capture the entire market and significantly boost profits. This lack of equilibrium arises from the firms competing in a market with substitute goods, where consumers favor the cheaper product due to identical preferences.
Generally, where there are two homogenous products, a rational consumer's preference between the products will be indifferent, assuming the products share common prices. Similarly, sellers will be relatively indifferent between purchase commitments [ clarification needed ] in relation to homogenous products. [ 10 ]