Essay: Pricing Discrimination in UK Rail

Sample Essay

The UK Rail is able to conduct this pricing discrimination as they have identified that different demand is represented by different customers for the services provided by the company. An article discussing discrimination pricing being employed by the Virgin Train service under the UK Rail provided that the reason as to why the discrimination pricing strategy is successful to TK Rail is because customers having different profiles and requirements from the train service have varying levels of demands which are catered to with varying levels of fares for the same journey (Price Discrimination on Virgin Trains).

Under the perfect pricing discrimination strategy,UK rail has been charging the prices that are bearable by the customers in respective market segments. The optimal price is offered to those wish to travel in different class of the trains and accordingly different prices are charged by the company for the travel fare, even if the journey is from the same departure point to the same destination for all types of markets. This type of pricing strategy is dependent on the consumer preferences and what they are willing to pay for the product and service (Farham, 2005) and therefore the service provider is able to charge different prices for the same journey. As the UK Rail has the monopoly for train services for the masses in theUK, they are able to conduct such price discrimination. In this case the average revenue curve forUKrail becomes the marginal revenue curve thus raising the level of profit being earned by the company on the train fares.

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