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Confused

Just Curious

Just Curious

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Jul 6, 2001
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Ok, I'm not the 'brightest spark' when it comes to economics so I thought I would throw this query out to you lot. :D

While thumbing through the latest issue of PGI I came across the Subscription Offer, saving 50%, excellent offer btw. Now what has me confused is this, why is it so much more cheaper to purchase PGI in the US than it is in the UK/Europe/Canada/ROW? I mean, its published in the UK, all subscriptions come to the UK so why is it so more expensive to purchase here than in the USA.
Don't get me wrong here, excellent magazine, decent price, I'd just like to understand why such a difference in the price. Calculations follow:

USA $32.00 (@ todays exchange rate = £16.45) Saving $51.88 (£26.68)
UK £25.00 Saving £10.40

Anybody care to enlighten me? ;)

Ta
 
M

Magic_8ball

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First idea that springs to mind is price discrimination. The US and UK are two different markets which have different PED's (Price Elasticity of Demands). PED basically is the extent to which the demand for a product is affected by a shift in price. If the demand is highly elastic, it will be affected a great deal by a change in price, if inelastic, it will be affected to a smaller extent.

Price discrimination occurs when one firm is operating in two separate markets with differing PED's. The assumption is that buyers in the british market are more willing to pay a higher price for the product than buyers in the American market and the firm exploits this inbalance to provide the good/service (in this case the magazine) at 2 different prices to maximise profit.

In other industries where goods are sold at a higher price, for instance cars, there are difficulties with price discrimination as products sold in one market for a cheaper price often tend to leak back to the market in which the price is set higher as people import them to save money. In the case of a magazine, this is hardly plausible as importing costs would outweigh the savings made by buying in a cheaper market.

Like I say this is just very basic economic theory and I'm not saying this is necessarily what PGi are doing just this is an economic explanation for this kind of thing.

:)
 
Big Mac

Big Mac

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Oct 19, 2006
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jeeez 8 ball you made that sound complicated - though i spose its hard to do it simpler without a diagram and a very basic knowledge of elasticity - p.s. you wouldn't mind helping to explain to me the whole of elasticity but in a really simple way just so i can pass my exams?:p :)
 
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Magic_8ball

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breakawayBP said:
jeeez 8 ball you made that sound complicated - though i spose its hard to do it simpler without a diagram and a very basic knowledge of elasticity - p.s. you wouldn't mind helping to explain to me the whole of elasticity but in a really simple way just so i can pass my exams?:p :)
Click to expand...
I thought I explained it in about as simple terms as I could actually mate lol. If you're trying to pass your exams I reckon your teacher's probably your best bet, I'm resitting unit 1 and 3 of economics in the nextcouple of weeks, only got a C last year lol. fingers crossed i'll do a bit better this time around :-/
 
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