Theresa O’Connor

Price discrimination

As you know, colleges set their sticker prices by picking some absurdly high figure, like $46,732 per year, then discount like crazy, although they call their discounts “financial aid.” But, they discount the way economic theory predicts a monopolist would — by perfect price discrimination, setting the profit-maximizing price for each potential customer. You learn in Econ 101 that in the real world, this theoretical result is seldom achieved because firms can’t obtain all detail necessary about each customer for setting the perfect price. If your econ professor has s a rogue wit, he will then point out that there is a single exception: American colleges, which insist upon complete financial disclosure from applicants for “financial aid.”

Steve Sailer (via Andrew)