Chapter 9 october 16th
Price discrimination- any non-uniform pricing policy used by a firm with market power to maximize
its profits
monopoly
oligopoly
monopolistically competitive firm
First degree price discrimination. (perfect price discrimination): (refer to notes for diagram)
each customer pays the amount that they are willing to pay
book def: offurs when a monopoly is able to charge the maximum amount each consumer is
wiling to pay for each unit of the product
-->ebay, auction, yard sale
Third degree price discrimination
have identical goods, but customers are charged different unit prices
--> 6pack vs 12pack
Questions of the chapter
1- Common types of non-uniform pricing(price discrimination)
2- The neccessar conditions for price discrimination
3- welfare effects
Stadium seating...individually charged seat (1st degree)
The necessary conditions for price discrimination listed on page 294
Ticket sales:
Prevent limited resales
Price discriminating monopoly should be able to sell more than non discriminating monopoly.
because the price price discriminating monopoly can identify the different consumer groups and
selectively charge them. (diagram on page 299)
3rd Degree price discrimination
Two groups that the firm is able to seperate because of the customers. Economy class tickets vs
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- Spring '07
- Davila
- Accounting, Economics, Pricing, Monopoly, Oligopoly, Price Discrimination, Degree Price Discrimination
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