6. Price Discrimination
f. describe pricing strategy under each market structure;
What is price discrimination?
Price discrimination is a practice whereby a seller charges different consumers different prices for the same product or service. It converts consumer surplus into economic profit.
What is the difference between first/second/third degree price discrimination?
- First-degree price discrimination is where each consumer is charge the price he is willing to pay
- Second-degree price discrimination is where prices vary across units but not people
- Third-degree price discrimination is when consumers are segregated by demographics or other traits.