Ch11 - Chapter11 1 TopicstobeDiscussed CapturingCS...

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  1 Chapter 11 Pricing with Market Power
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2 Topics to be Discussed Capturing CS Price Discrimination Intertemporal Price Discrimination and Peak- Load Pricing The Two-Part Tariff
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3 11.1 Capturing Consumer Surplus Quantity $/Q D MR P max MC Some willing to pay > P* P* Q* P 1 Willing to pay < P*, but still > MC P 2 Strategies to capture more CS Price discrimination Tariffs & Bundling
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4 11.2 Price Discrimination First Degree Price Discrimination Charging each customer the max they are willing to pay (i.e.  reservation price)
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5 Without Discrimination   (Recall) Quantity Price MC D P 0 Q C Q M Producer  Surplus Yellow Area = PS = (P M - MC) between 0 to Q M P M Where MR =MC
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6 Example P = 6 - Qd Price Discrimination Q P TR MR 1 5 5 5 2 4 9 4 3 3 12 3 4 2 14 2 5 1 15 1 6 0 15 0 Note MR =P
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7 Perfect Price Discrimination  (1 st  Degree) Quantity Price MC D=MR Q ** Q M Producer  Surplus P M With perfect discrimination, D = MR Q to Q** PS to include purple areas Note Q** same as Q C
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8 Second-Degree Price  Discrimination Second-degree price discrimination Charging different prices per unit for different  quantities of the same good  Electricity, water, heating fuel
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9 Second-Degree Price  Discrimination
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This note was uploaded on 09/25/2010 for the course ECON Econ 2296 taught by Professor W.graygiovannetti during the Fall '10 term at Langara.

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Ch11 - Chapter11 1 TopicstobeDiscussed CapturingCS...

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