Editing Geographical pricing (section)

== Zone pricing ==
{{also|Locational marginal pricing}}
Zone pricing (also '''zonal pricing''') is a variant of the uniform pricing: the prices are the same within a "zone" (a geographical slice of the market), prices increase with the costs of shipping and reflect the average delivery cost inside the zone. This is the approach taken, for example, by the [[parcel delivery]] services. The zone pricing reduces the phantom freight, yet keeps the pricing structure relatively simple, thus making it easier for the seller to compete in a faraway market.{{sfn|Boone|Kurtz|2015|p=635}}

The definition of zones is sometimes done by drawing concentric circles on a map with the plant or warehouse at the center and each circle defining the boundary of a price zone. Instead of using circles, irregularly shaped price boundaries can be drawn that reflect geography, population density, transportation infrastructure, and shipping cost.  (The term "zone pricing" can also refer to the practice of setting prices that reflect local competitive conditions, i.e., the market forces of supply and demand, rather than actual cost of transportation.){{fact|date=October 2022}}

=== Gasoline ===
Gasoline marketers find it profitable to map out zones by determining what price the local market can bear and charging the gas station owners different wholesale prices depending on the zone.{{sfn|Boone|Kurtz|2015|p=635}}
{{sources|section|date=October 2022}}
Zone pricing, as practiced in the [[gasoline]] industry in the United States, is the pricing of gasoline based on a complex and secret weighting of factors, such as the number of competing stations, number of vehicles, average [[traffic flow]], population density, and geographic characteristics.

Many businesspeople and economists state that gasoline zone pricing merely reflects the costs of doing business in a complex and volatile marketplace.  Critics contend that industry [[monopoly]] and the ability to control not only industry-owned "corporate" stations, but locally owned or [[Franchising|franchise]] stations, make zone pricing into an excuse to raise gasoline prices virtually at will.  Oil industry representatives contend that while they set wholesale and ''dealer tank wagon'' prices, individual dealers are free to see whatever prices they wish and that this practice in itself causes widespread price variations outside industry control.