67.5k views
0 votes
Successfully employing a discriminatory pricing strategy will be difficult for a firm if:

1) the firm finds itself operating in a perfectly competitive market
2) market conditions are such that arbitrage can occur
3) the firm controls a very small share of the market
4) there are differences in willingness to pay for units of the good or the price elasticity of demand between consumers

1 Answer

6 votes

Final answer:

Market forces can pressure businesses to avoid discrimination for economic benefits, such as increasing profits by serving a diverse customer base or hiring the best workers irrespective of race or gender.

Step-by-step explanation:

Market forces can incentivize a business to act in a less discriminatory fashion in several ways. If a local flower delivery business, for example, is run by a bigoted owner but serves a large black customer base, the owner may realize that holding discriminatory views can lead to a loss of revenue and market share. Similarly, an assembly line that has traditionally hired only men might be compelled to hire women when facing a shortage of qualified workers to maintain productivity and competitiveness.

In the case of a home health care services firm with a biased owner who wishes to pay lower wages to Hispanic workers, market forces such as competition for labor and the legal repercussions of discriminatory wage practices can pressure the owner to offer equal pay to all workers based on their productivity. Overall, in competitive markets, businesses that prioritize economic factors over prejudiced beliefs are more likely to succeed, hiring the best workers and serving the widest customer base to maximize profits.

User Facundo Colombier
by
7.6k points