How Price Discrimination Will Be Different in the Online World

Price discrimination is the practice of charging different consumers different prices for the same good, where the price difference cannot be accounted for by differences in cost. The ability to price discriminate enables a seller to charge buyers prices that more closely approximate their willingness-to-pay for the item. By price discriminating, sellers are able not only to maximize their own profits, but also to benefit consumers by offering more goods to more people (goods that otherwise may not be profitable to produce, and people that otherwise may not have been able to afford the items).