David Stevens has the answer I was looking for to my question: how can price discrimination exist if everyone pays the same price? He writes

The market segmentation comes from Philips Intl charging the same price to all markets despite different distribution costs. Consumers in a distant country essentially get a discount because normally higher transport costs are not reflected in the price. Consumers in a neighboring country to Philips Intl end up paying a relatively higher price when their transport costs are lower, but not reflected by a lower price.

The short answer I was looking for is “free shipping”. The story need not be international shipping either, as long as shipping costs are increasing (or decreasing!) with distance.

Phlips comes from Louis Phlips, who wrote a classic book called “The economics of price discrimination”, where I first read about this counterintuitive kind of price discrimination.

Good work David. There were other good guesses as well.

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