Price Discrimination and High Line Living

The article “High Line Living” by Vivian Marino, a columnist at The New York Times, describes a luxurious penthouse at the High Line that is due to be on sale in the nearest future. The penthouse is situated in a glass-steel fourteen-story building in Chelsea and currently costs $22.95 million. The author also interviews Pierre Lagrange, one of the most affluent persons in Britain and the present tenant of the accommodation.

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It is stated that, during the period of Mr. Lagrange’s residence, the penthouse was decorated with modern art pieces and custom-designed movables. The top deck of the penthouse contains a portico and a bar; floor-to-ceiling windows overlook the terrace. The lower deck is a living space. The transparent walls present a wonderful panorama; the rooms have automatic window screens, and the decks are connected with elevators and stairs. There is a bath in each bedroom.

Working simultaneously in Britain and the US, Mr. Lagrange bought the penthouse while one of his sons was studying in New Jersey. However, after the young man’s graduation, the apartment is mostly uninhabited. Thus, the owner has decided to sell the accommodation with the hope of coming across a smaller one, sometimes.

He is quite nostalgic about the parties he used to have in this apartment and the magnificent sunset panoramas over the Hudson River. However, since Mr. Lagrange bought the apartment, the district has developed greatly, which is why the accommodation now costs more than twice the price it used to.

In relation to the housing market (as well as any other market), the scheme of nonlinear pricing is visible. Nonlinear pricing is one of the forms of price discrimination that consists of the dependence of price one pay for an item on the price of other items one buys. To put it simply, the cost of a product – or, in this case, an accommodation – depends not only on the quality of the product itself but also on the buyer’s level of income.

Consumers with a high-income level tend to purchase normal or luxury goods because they can afford them. At the same time, persons of lower-income buy inferior goods that they would not probably have bought if they could have afforded more prestigious goods (Armstrong 1-4). What the providers do is supply the market with a line of products of varying quality, thus putting a consumer at a choice.

However, the costs range drastically, making normal or luxury goods unaffordable for lower-income-level consumers. Besides, ranging the prices, the providers usually exploit the consumers’ psychology (Armstrong 9-10). That is to say, an expensive good is commonly believed to be of better quality and more prestigious than a cheaper one, thus belittling those who cannot afford it.

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Referring to the article under consideration, discrimination is tangible. Clearly, the High Line district does not offer accommodation for inferior good buyers, considering the location and the surroundings. What is more, a duplex penthouse is an apartment with significant living space that adds up to the price. In sum, such accommodation is oriented to a certain class of consumers and is beyond the reach of all other consumers.

Besides, buying the apartment, the current owner kept in mind the possible profit: the district was developing, and the accommodations were rising in price. Thus, the cost of the penthouse is a sum of not only its location and size: such accommodation is affordable to persons of status, thus discriminating all other strata of the society.

Works Cited

Armstrong, Mark. “Nonlinear Pricing.” Munich Personal RePEc Archive, 2015. Web.

Marino, Vivian. “High Line Living.” The New York Times, 2015. Web.

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