That just sounds like racism though - how do they tell who qualifies for the ‘local discount’ versus the ‘tourist premium?’

Betting it’s based on stereotypical appearance and language, not checking IDs.

A more charitable approach might be to charge an extra fee for foreign credit cards - that way you get to effectively upcharge tourists, while encouraging conversion to and payment by local currency, additionally saving yourself transaction fees in the process.

Japan specifically is extremely xenophobic, they actively discourage people from immigrating, they do not want foreigners there except as tourists. If you are not born in Japan, you can never become Japanese as far as the locals and the government are concerned.

It's kind of reductionist to take that environment and that culture and just default to "giving the white guy the expensive menu is racism." You'd have to do that to probably 1500 people before you hit the person who has actually immigrated as opposed to a tourist.

I figured the same but wanted to give them the benefit of the doubt

Costa Rica the vast majority of tourist attractions have a resident price and a tourist price. I have mixed feelings about it -- on the one hand, it makes sense for a country reliant on tourism to charge tourists more, since tourists are much richer, and a lot of the money goes to ecological protection, research, the arts, etc. On the other hand, it's kind of a bummer for a nominally cheap country to have quite expensive museum and national park admissions - it's hard not to feel like you're getting screwed, and it's not an ignorable difference for my budget.

It's an interesting dilemma. Personally, I prefer the version of price discrimination where you introduce high-margin premium value-adds that people can opt in or out of - alcohol or steak/lobster at a restaurant, rooms with views or additional packages at hotels, table service, etc, which can allow wealthier customers to subsidize less wealthy ones without necessarily compromising the core service. Though that's still a bummer when adding a view to a room is prohibitively expensive for something that cost the hotel nothing more to provide, and you feel like either you're getting screwed or you'll always have an alleyway view from your hotel.