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Price Discrimination in Economics OR Discriminating Monopoly (Eng Rec.)
Abstract
Price discrimination occurs when the same commodity is sold at more than one price. Such practice by monopolist is called Discriminating Monopolist. There are 3 degrees of price discrimination (discussed below). Price discrimination is possible only when there is monopoly, separate markets exist, product differentiation, and differential consumer behavior. The aim of the monopolist in resorting to price discrimination is to increase total revenue and profit.
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Price Discrimination or Discriminating Monopoly
Price discrimination occurs when the same commodity is sold at more than one price.
A monopolist often charges different prices of the same product from different consumers or different industries. This price policy of the monopolist is called Price Discrimination. The monopolist practicing it is called Discriminating Monopolist.
Definitions
In the words of J.S. Bains, "Price discrimination refers strictly to the practice by a seller to charging different prices from different buyers for the same good."
In the words of Mrs. Joan Robinson, "The act of selling the same article produced under a single control at a different price is known as price discrimination."
According to Dooley, "Discriminatory monopoly means charging different rates from different customers for the same good or service."
Kinds of Price Discrimination
Price discrimination is mainly of four types:
(1) Personal Price Discrimination: When a monopolist charges different prices from different customers for the same product, then it is called personal price discrimination. Personal price discrimination becomes possible because of the ignorance of the consumer, little difference in price, and the nature of goods and services. For instance, a doctor charging different fees for the same type of operation from rich and poor patients.
(2) Geographical Price Discrimination: When a monopolist charges different prices in different areas for the same product, then it is an example of geographical price discrimination. In places where substitutes of the goods are available, there the monopolist charges less price, and where there are no competitors of the product there he charges a high price. In other words, in a market where demand is elastic, he charges a low price, and where demand is...
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By Sivananda PandaAbstract
Price discrimination occurs when the same commodity is sold at more than one price. Such practice by monopolist is called Discriminating Monopolist. There are 3 degrees of price discrimination (discussed below). Price discrimination is possible only when there is monopoly, separate markets exist, product differentiation, and differential consumer behavior. The aim of the monopolist in resorting to price discrimination is to increase total revenue and profit.
Visit Website: Commerceya
Subscribe on Youtube: Commerceya
Price Discrimination or Discriminating Monopoly
Price discrimination occurs when the same commodity is sold at more than one price.
A monopolist often charges different prices of the same product from different consumers or different industries. This price policy of the monopolist is called Price Discrimination. The monopolist practicing it is called Discriminating Monopolist.
Definitions
In the words of J.S. Bains, "Price discrimination refers strictly to the practice by a seller to charging different prices from different buyers for the same good."
In the words of Mrs. Joan Robinson, "The act of selling the same article produced under a single control at a different price is known as price discrimination."
According to Dooley, "Discriminatory monopoly means charging different rates from different customers for the same good or service."
Kinds of Price Discrimination
Price discrimination is mainly of four types:
(1) Personal Price Discrimination: When a monopolist charges different prices from different customers for the same product, then it is called personal price discrimination. Personal price discrimination becomes possible because of the ignorance of the consumer, little difference in price, and the nature of goods and services. For instance, a doctor charging different fees for the same type of operation from rich and poor patients.
(2) Geographical Price Discrimination: When a monopolist charges different prices in different areas for the same product, then it is an example of geographical price discrimination. In places where substitutes of the goods are available, there the monopolist charges less price, and where there are no competitors of the product there he charges a high price. In other words, in a market where demand is elastic, he charges a low price, and where demand is...
Read More...