second-degree price discrimination

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A form of price discrimination in which different units of a product are sold at different prices. A discount for buying in bulk is an example of second-degree price discrimination. Another form of second-degree price discrimination is commodity-bundling. Two products (such as a computer and the operating system) can be sold separately or as a bundle. Selling the bundle for less than the sum of prices of the two products is second-degree price discrimination. The benefit for the seller of bundling is that it may attract additional consumers who would not have purchased the separate products. See also first-degree price discrimination; third-degree price discrimination.

Subjects: Economics.

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