The Economics of Discrimination: Key Terms

First-degree price discrimination: Perfect price discrimination, also known as first-degree price discrimination, occurs when a firm charges each buyer exactly their willingness to pay.

Second-degree price discrimination: Second-degree price discrimination occurs when consumers are charged different prices based on characteristics of their purchase.

Statistical discrimination: Statistical discrimination occurs when expectations cause people to discriminate against a certain group.

Taste-based discrimination: Taste-based discrimination occurs when people’s preferences cause them to discriminate against a certain group.