In the News Teaching Activity: Dynamic Pricing at the Slug and Lettuce (Sept 2023)
Slug and Lettuce pub group plans to charge more for pints at busier times. Have a go at this free teaching activity, which includes a downloadable worksheet and suggested answers.
Increasingly, it seems, businesses are starting to charge customers more at peak times than quieter times and this BBC article considers the implications of this type of dynamic pricing.
Companies like Uber have been upping their prices at peak times for several years; parents often complain about the high cost of travelling during the school holidays and now it seems that pubs, such as the Slug and Lettuce, are planning to try and ‘extract some of the consumer surplus’ in their market. Dynamic pricing is very similar to price discrimination and has advantages and disadvantages for the businesses that choose to practise this strategy. It may be that we will see this strategy more and more as technological advances make it cheaper for businesses to change their prices ‘in real time’, responding ever more instantly to changing conditions of demand and supply.
Read the article and then answer the following questions.
- What do understand by the term ‘dynamic pricing’?
- Explain how price discrimination can allow a business to ‘extract some of the consumer surplus’
- Discuss the similarities between dynamic pricing and price discrimination.