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Why Tourists Pay More at the Beach

I’m on our annual beach week with the extended family in New Jersey and the beach patrol comes by insisting I buy beach tags for everyone 12 and over.

The prices are: $6 for one day, $12 for one week, or $24 for the season (but only $19 for the season if bought before Memorial Day).

The price structure is very clever: Most people who rent stay for 1 week (spend $12) or 2 weeks (spend $24, since they are unlikely to be informed about the pre-season deal). The permanent residents (or owners of the properties that are rented part-season) are informed about the deal and spend $19.

Weekend visitors buy the day-tags. Each tag is color-coded, so it is easy for the beach patrol to separate markets to create and maintain this clever form of price discrimination.