Firms need to figure out when to use different prices for different customers and how to manage their inventory effectively. By studying competition between firms, researchers found that using different prices can be good if done with the right inventory management. Factors like limited capacity, product quality, and customer differences affect how well firms can make money. Price discrimination can help with customer differences, but firms also need to allocate inventory strategically to make it work. Examples like fast fashion and vaccines show how this works in the real world.