International price discrimination worthy of an enquiry?

Politicians in Australia are trying to put Apple's product pricing before an enquiry as according to research by the SMH Apple is charging consumers here much more than it does elsewhere in the world.

Whilst price discrimination can be a important competition issue, is this particular case worthy of a federal enquiry?

For many years pharmaceuticals have been experts at charging differential prices for drugs across different countries. Typically, but not always, charging higher prices in wealthy nations and lower prices in developing regions. They say it's a way to efficiently recover their high common costs (e.g. R&D) and the means justify the ends.

Economists would describe this as Ramsey pricing in action - a contentious little beast which implies setting prices inversely proportional to demand elasticity.

However the public discontent around this is quite understandable. No one likes to find out they are paying the highest price on the market. But, are these products for which price control intervention is justified?

According to Apple's 2011 annual report, sales were particularly strong in Australia with large increases in year-over-year growth. And the Asia-Pacific segment (which is the aggregated level that they report to) represented 13% of their global sales portfolio. So despite the higher prices Australian consumers have been quite willing to pay for Apple's products, and a lot of them.

Moving to the supply side, consumers are able to purchase a variety of lower cost substitutes across the whole of Apple's range. Computers, music and handsets hardly single point-source markets in this region.

So whilst it's important that consumers are protected from price gauging and there are national interests at stake, all things considered, high-end products from a single supplier (all be it a large one) is probably not an issue that needs to be front and centre of the federal regulatory agenda.

In my view the theory of harm is weak, but it's a nice straw man to win favour with some of the voting population all the same...