What is the difference between standard pricing and two-tiered pricing? What are the common characteristics of firms that use each type?

What will be an ideal response?

A standard pricing policy involves charging the same price for products and services regardless of where they are sold or the nationality of the customer. Firms selling goods that are easily tradable and transportable often adopt this pricing approach out of necessity. For example, if a firm manufacturing DRAM memory chips charged different customers vastly different prices, some of its favored customers might begin to resell the chips to less-favored customers–an easy task, given the small size and high value of the chips. Similarly, firms that sell commodity goods in competitive markets often use this pricing policy. With two-tiered pricing, the firm sets one price for all its domestic sales and a second price for all its international sales. A firm that adopts a two-tiered pricing policy commonly allocates to domestic sales all accounting charges associated with research and development, administrative overhead, capital depreciation, and so on. The firm then can establish a uniform foreign sales price without having to worry about covering these costs. Two-tiered pricing often is used by domestic firms just beginning to internationalize.