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o customer characteristics: . student tickets ? Pricing over time: peaktime vs offpeak time. . telephone charges. ? Noisy pricing: pricing schemes where those with the time to work them out will seek out a better deal than those who are too busy and confused. CONSTRAINTS ON PRICE DISCRIMINATION AS A STRATEGY ? Regulation: price discrimination may be illegal. ? Competition: ? Arbitrage ? Commitment and reputation DEMAND CURVE FOR AIR TRAVEL Supply curve PRICE DISCRIMINATION: THREE FARES REVENUE ACHIEVED BY INNOVATIVE PRICING INTELLECTUAL PROPERTY ? Intellectual property (IP): the output of a creative process such as an invention. Three features: ? It is intellectual ? It is often a very intangible asset ? IP is treated in Law as property ? In Economics, intellectual property is viewed as occupying an intermediate position between a free resource and tangible property. WHY DOES IP NEED PROTECTION? ? To lawyer: IP need protection because it is a property ? To economist: protecting IP is to encourage the creative firms to invest their effort in creativity by assuring them that they will retain the economic value of their inventions METHODS OF IP PROTECTION: institutional methods of IP protection ? Patent gives a firm a monopoly right to mercial use of a particular invention for a given period. In return, the patent holder must set out in the patent all the details of the invention, and this patent will be made available for public inspection. ? Copyright limits “