Econ 3-28-2011 - increasing producer surplus • Legal...

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Econ 3-28-2011 14:25 Price Discrimination:  Charging different prices to different customers There is strong incentive to price discriminate when one has market power.  (monopolist in an example) Clear price discrimination o Airline Tickets: more pricy close to departure o Student Movie Tickets: students pay less because of their income Less Clear Price Discrimination o Quantity Discounts:  buying in bulk, with large quantities you pay more  attention to price o Hard/Soft cover books Price discrimination increases efficiency (reduce DWL) but generally through 
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Unformatted text preview: increasing producer surplus • Legal restrictions on price discrimination, so firms use various practices o Volume discounts o Student discounts o Product Placement Milk at Meijer Summary • A perfectly price-discriminating monopolist produces the same as perfect competition • Short-Run o MR is different (MR=P in perfect competition) o Know what P a monopolist charges • Long-Run o Profitability assessment is same: P vs. ATC o Difference: other firms can exist, so profits will be zero Chapters 15 & 16 14:25 14:25...
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This note was uploaded on 10/04/2011 for the course ECON 201 taught by Professor C.liedholm during the Spring '07 term at Michigan State University.

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Econ 3-28-2011 - increasing producer surplus • Legal...

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