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The Ramifications of Price Discrimination

Can you help me out with the following questions:

1.Thomas Selling, an expert on nuclear strategy and arms control, observed in his book The Strategy of Conflict (Cambridge, MA: Harvard University Press, 1960), " The power to constrain an adversary depends upon the power to bind oneself." Explain this statement using the concept of strategic commitment.

2.In the 2000 US Presidential contest, Al Gore was advised by his strategists to wait for George W. Bush to announce his vice-presidential running mate before making his own decision on a running mate. Under what circumstances would Gore be better off giving Bush a head start on putting together his presidential ticket? What kind of strategic situation is this?

3.Price discrimination sounds like a very socially "bad" thing. Can you think of any reasons why price discrimination could be viewed as a socially "good" thing? Explain.

4."Declining block pricing is a crude form of perfect price discrimination." In what sense is this statement correct? In what important way is it wrong?

Solution Preview

1. In respect to the concept of strategic commitment, this statement seems to mean that constraining an adversary would depend on your ability to have the self-control or self discipline to strategically place your forces in the areas that would provide the most benefit to you. This self-control or binding yourself in this situation, will require that strategic thinking is utilized in place of emotions or pique, which would help you to avoid committing your forces or assets in a manner that are reckless and detrimental to gaining success.

2. The circumstances that Gore would be better ...

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