Jason Furman and Tim Simcoe, who served on President Barack Obama’s Council of Economic Advisors, wrote, “Economists have studied [price discrimination] for many years, and while big data seems poised to revolutionize pricing practice, it has not altered the underlying principles. . . . Those principles suggest that [price discrimination] is often good for both firms and their customers.” Furman and Simcoe described “need-based financial aid for college students” as an example of price discrimination that is good for consumers.
a. What do Furman and Simcoe mean by “underlying principles”?
b. In what sense is need-based financial aid an example of price discrimination?
c. Is financial aid good for both colleges and students? Briefly explain.