Pricing puzzle

Definition

A pricing puzzle is a pricing pattern or strategy that appears puzzling, usually because they violate the law of one price. Typically, it involves one or more of the following:

• An apparent violation of the law of one price by a single seller, which looks like price discrimination, but where the conditions generally considered necessary for successful price discrimination do not exist. See price discrimination#Conditions for price discrimination and price discrimination#Alternative explanations for apparent price discrimination.
• An apparent violation of the law of one price across multiple sellers, i.e., a price dispersion phenomenon.
• Apparent price discrimination across multiple similar goods: very similar goods are not being priced in the same proportion to their marginal cost.

Such puzzles are mainly used not so much because the specific problems being considered are important but because the reasoning used to discuss possible explanations highlights important economic principles and in some cases leads to the development of new economic insights.

Examples

For a full list, see Category:Pricing puzzles.

Here are some of the more common folklore-type puzzles:

Puzzle	Quick description	Common explanations
Popcorn puzzle	Popcorn sold in cinema halls typically costs much more than popcorn available outside	price discrimination, other more complex explanations