Price Discrimination, Political Affiliation, and Nintendo

Two different and unrelated examples of price discrimination today.

First (1), from Allen McDuffee (HT: Ezra Klein):

A conservative shop owner is charging liberals an extra dollar for smoothies in his new I Love Drilling Juice and Smoothie Bar in Vernal, Utah.

The owner takes the additional tree-hugging surcharge and donates the money to political conservative groups, such as the Heritage Foundation. I hope that later this semester, some of my students can discuss the consequences (positive/negative) as well as the issues with implementing such a policy.

Then (2), this passage from Jeff Ryan’s book Super Mario: How Nintendo Conquered America, describing the business plan put in play by Hiroshi Yamauchi after the video game console crash of 1982:

Yamauchi believed in the Famicom [the original version of the Nintendo gaming system] so much he canceled Nintendo’s arcade division to focus funds and experience on it. Price was one of Yamauchi’s no-compromise angles. The Famicom had to be cheap, cheaper than most everything else on the market. […] In fact, Yamauchi wanted a price point of under ten thousand yen, about seventy-five dollars – and wanted to make a profit off each console. This seemed like a pipe dream, to double-dip from the two-part tariff business model. This model, most famously used by Gillette, sets a one-time price for the razor, and an ongoing price for the blades. Yamauchi insisted Nintendo profit from both the games and the consoles, no easy feat.

This is a common pricing scheme in many markets, and a form of price discrimination.

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