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Unformatted text preview: 3.31.10 Lecture Notes, Econ 201- Start Reading Chapter 18 PRICE DISCRIMINATION- Definition: Selling the same good at different prices to different customers (markets) 1. Perfect Price Discrimination a. Charging each customer his/her willingness to pay 2. Real World Price Discrimination a. Third degree price discrimination b. Dividing customers into 2 or more GROUPS EXAMPLES OF GROUP PRICE DISCRIMINATION- Amusement Park- Movie Theatre- Restaurants- Bus Fares TWO NECESSARY CONDITIONS FOR SUCCESS IN GROUP PRICE DISCRIMINATION 1. Separate Groups 2. Different Price Elasticities a. Higher price in Lower elasticity group b. Lower price in Higher elasticity group OLIGOPOLY- Market in which there are FEW firms, so individual firms can affect market price - Interdependence of firms is an important characteristic. The demand curves for individual firms are dependent on the pricing and marketing decisions of competitors....
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This note was uploaded on 10/13/2011 for the course EC 201 taught by Professor Haider during the Spring '10 term at Michigan State University.
- Spring '10
- Price Discrimination