In this chapter, we learn that most new cars aren’t sold at their list price but are sold at a discount and that this allows dealerships to charge more to customers with inelastic demand. At the same time, studies have shown that retail car dealerships systematically offer substantially better prices on identical cars to white men than they do to blacks or women. (Source: Ian Ayres, “Fair Driving:

Gender and Race Discrimination in Retail Car Negotiations,”

Harvard Law Review 104 (1991): 817–72.)

a. Why do you think this happens?

b. In this example, does the fact that customers have different elasticities allow for racial or sexual discrimination?

(Feminist)