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Econ 332 Markets Firms Institutions- Notes

Econ 332 Markets Firms Institutions- Notes - Chapter 9...

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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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