Young Sheldon — Candy Entrepreneur

 

George has become quite the entrepreneur through arbitrage. First, he buys snow globes from a company going out of business to resell at a higher price than to his neighbors. Now, he realizes that he can buy candy in bulk and then sell it outside the vending machine to people looking for a cheaper option. Even though it’s against school rules, he realizes that the school’s monopoly power over the vending machines results in higher prices than what’s necessary.

Young Sheldon — Snow Globe Arbitrage

George notices that the greeting card store downtown is going out of business and he sees this as a business opportunity! He believes that he can buy Texas-themed snow globes for $1 and resell them to his neighbors for $5. George is arbitraging the snow globes, buying low and selling high. He goes through some struggles at first, but finds out how to sell them by the end of the episode.

Life in Pieces — Discounts & Sunk Costs

 

Tim tries to host a guys night and things don’t seem to be going his way. Beyond the awkwardness of just the two of them, the big pay per view fight lasts only a couple of seconds. While the two did get to watch the fight, which had a knockout, it wasn’t quite worth the hundred dollars they paid. Tim notes that he may be able to turn it off and get his money back. With a lot of experience goods, it’s not necessarily the actual outcome of the action that people care about. Tim and Matt did see a fight, so why is he so focused on getting his money back?

A second quick econ line occurs later when they sit down for dinner. Even though Tim isn’t eating any tacos, he notes that the cook is cheaper since he expects Matt to eat 25 or 26 tacos. This form of bulk discounting represents second degree price discrimination. With this pricing mechanism, the hope is to induce customers to purchase more than they would have (law of demand) even though making an additional taco doesn’t have the added cost of another cook.

CBS Boston — Avoiding Price Discrimination

 

This CBS clip details ways families can avoid being subjected to price discrimination tactics by firm. CBS affiliates across the country started searching for different items around the country to see how varied the prices were. While customers may prefer to pay the same price (an argument for equity), firms can actually improve efficiency by practicing price discrimination.

Life in Pieces — Unbundling the Shoes

 

At their family garage sale, John tries to sell a pair of shoes as separate items. By unbundling the items, he offers one shoe for 50 cents, but the second shoe as $10. He almost gets tricked when the shopped is buying the shoes for her husband who only has one leg, but John tries to quickly back-peddle. This form of price discrimination is the opposite of a bulk discount.

The Toys That Made Us — Two Part Tariffs for Barbie

 

When designing the pricing model of Barbies, Mattel looked to Gillette’s pricing model for razors and razorblades, which is a form of second degree price discrimination that utilizes two part tariffs as a way of maximizing profit from group buyers. The doll (or razors) are sold at very low prices, but the accessories (or razor blades) are the main drivers of profit for the firm. This model allows the company to sell a lot of base products at near marginal cost, but then charge high prices for the accessories, which are a critical component of the overall product.

Jurassic Park — Coupon Day at the Park

This clip has both the idea of an inelastic good and the idea of price discrimination. I suggest using it when teaching elasticity and then also using it when you teach price discrimination and talk about how they connect!

Here’s the page from the book.

Thanks to James Tierney for the clip and description!

NPR Planet Money — The Price Tag Hasn’t Always Existed

 

Really neat summary of the history of the price tag. This could make a great opening for a principles course or a good example of price discrimination before the price tag was invented. The price tag can be used as an example of the Quaker’s insistence on the law of one price or the idea of efficiency/equity tradeoffs. I like to use this video in the beginning of my course to introduce the idea of prices, values, and costs.

Los Angeles Clippers — Dynamic & Variable Pricing

The LA Clippers explain the difference between variable and dynamic ticket pricing, which are often confused by fans. Variable pricing refers to changes in ticket prices based on factors like opponent, day of the week, or time of the game. Dynamic ticket pricing takes things a step further and actually bases the ticket price off demand and supply for a particular game.

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