Sophisticated Monopoly Pricing

Sophisticated Monopoly Pricing - Norton Media Library...

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Chapter 12 Sophisticated Monopoly Pricing Norton Media Library W. Bruce Allen Neil A. Doherty Keith Weigelt Edwin Mansfield
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Single-Price Monopolist
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Definition: Price discrimination is a policy of charging different prices on different units sold in order to increase profits. Price discrimination is a means to an end: that of increasing monopoly profits and surplus. In effect the monopolist captures more of the consumers’ surplus through price discrimination. Price Discrimination: selling the same product at more than one price
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Types of Price Discrimination The three main types of price discrimination are these. (A) First Degree or Perfect price discrimination: occurs when the monopolist charges the maximum price on every unit sold to every customer. (B) Second Degree or Quantity discrimination: occurs when the monopolist charges different prices on different amounts, but does not distinguish between customers.
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(C) Third Degree, Multi-market or inter- customer price discrimination: occurs when a monopolist charges different types of customers different prices.
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Sophisticated Monopoly Pricing - Norton Media Library...

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