Why the same product sells at two prices in one shop

The hardback and the paperback contain the same text. The express queue and the ordinary queue reach the same counter. In each case a deliberately worse option exists so that the people who would have paid more still can, and those who would not still buy something.

What everyone sees

Two prices for the same thing looks like inconsistency, or like one group being overcharged. It is a sorting mechanism. With one price the seller must choose between excluding lower-value buyers and forgoing revenue from higher-value ones, and a second version lets both transactions happen.

What is actually happening

Varian’s treatment of price discrimination sets out the general result: charging different prices to buyers with different valuations can raise output and total welfare relative to a single monopoly price, because customers who would have been priced out are served. Deneckere and McAfee analysed the sharper version, showing that a firm may profitably create an inferior product at additional cost — damaging a good on purpose — because the degraded version sorts buyers by willingness to pay, and that both the firm and some consumers can end up better off than under uniform pricing. The awkward implication is that the worse option is not neglect. It was engineered, and its inferiority is the feature being sold.

Why it stays hidden

The design hides because the cheaper version looks like an older or simpler product rather than a deliberately limited one. Nobody advertises that a capability was withheld. When it becomes visible — a paid unlock for hardware already installed — the reaction is disproportionate to the economics, because the sorting was never meant to be seen.