PRICE DISCRIMINATION
When the monopolist charges different prices from different buyers for the same good, he is known as a discriminating monopolist.
THE THREE DEGREES OF PRICE DISCRIMINATION
FIRST DEGREE PRICE DISCRIMINATION
SECOND DEGREE PRICE DISCRIMINATION
THIRD DEGREE PRICE DISCRIMINATION
FIRST DEGREE PRICE DISCRIMINATION
First-degree price discrimination is the extreme form of discrimination and is also known as perfect discrimination
It is the most profitable pricing scheme for the firm. Because the buyers are charged the maximum possible price for each unit of output.
An example of first degree of discrimination would be consumers bidding for tenders
SECOND DEGREE PRICE DISCRIMINATION
This is an imperfect form of price discrimination. Instead of setting different prices for each unit, it involves pricing based on the quantities of output purchased by individual consumers
An example of second degree of price discrimination would be electricity
THIRD DEGREE PRICE DISCRIMINATION
This is the most common form of price discrimination. It involves separating consumers or markets in terms of their price elasticity of demand
Often, third-degree price discrimination occurs in the markets that are geographically separated
Example of third degree of discrimination would be railway concession for students
LEARNINGS
Every seller would discriminate prices
I have also learnt that price discrimination is profitable and existing and new businesses have found many ways to do it. For example theaters and Amusement Parks like Essel World would often charge younger customers less than adults.
Price discrimination could be healthy as it can make goods and services affordable to the people
CONCLUSION
Every seller would discriminate prices and that the seller must be able to distinguish between those buyers who are willing to pay a high price from those who are not.
When the monopolist charges different prices from different buyers for the same good, he is known as a discriminating monopolist.
THE THREE DEGREES OF PRICE DISCRIMINATION
FIRST DEGREE PRICE DISCRIMINATION
SECOND DEGREE PRICE DISCRIMINATION
THIRD DEGREE PRICE DISCRIMINATION
FIRST DEGREE PRICE DISCRIMINATION
First-degree price discrimination is the extreme form of discrimination and is also known as perfect discrimination
It is the most profitable pricing scheme for the firm. Because the buyers are charged the maximum possible price for each unit of output.
An example of first degree of discrimination would be consumers bidding for tenders
SECOND DEGREE PRICE DISCRIMINATION
This is an imperfect form of price discrimination. Instead of setting different prices for each unit, it involves pricing based on the quantities of output purchased by individual consumers
An example of second degree of price discrimination would be electricity
THIRD DEGREE PRICE DISCRIMINATION
This is the most common form of price discrimination. It involves separating consumers or markets in terms of their price elasticity of demand
Often, third-degree price discrimination occurs in the markets that are geographically separated
Example of third degree of discrimination would be railway concession for students
LEARNINGS
Every seller would discriminate prices
I have also learnt that price discrimination is profitable and existing and new businesses have found many ways to do it. For example theaters and Amusement Parks like Essel World would often charge younger customers less than adults.
Price discrimination could be healthy as it can make goods and services affordable to the people
CONCLUSION
Every seller would discriminate prices and that the seller must be able to distinguish between those buyers who are willing to pay a high price from those who are not.