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Study Notes

The Hurdle Model of Price Discrimination

AS, A-Level
AQA, Edexcel, OCR, IB

Last updated 21 Mar 2021

The hurdle model is associated with economist Professor Robert Frank. The hurdle method separates buyers with low minimum buying prices from buyers with higher so-called reservation prices.

To take advantage of a lower price, the consumer must be prepared to overcome or jump over some kind of hurdle which acts as an inconvenience.

For example:
  • They might have to delay their purchase until a product is remaindered or sold off at lower prices when a more advanced version is available e.g. second edition paperbacks are significantly cheaper than hard back books, it is cheaper to buy/rent/stream older DVDs a few months after their first release
  • Consumers may have to risk not getting the product at a time and place of their choosing e.g. relying on stand-by tickets for shows and airlines
  • They may get a deeper discount if the product is mildly damaged e.g. dented household appliances - “seconds”
  • Discounts may require customers to collect & redeem coupons

Customers prepared to do this tend to be more price sensitive

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