C12: Price Discrimination

Question 1

Price Discrimination

Answer 1

Practice of selling the same good to different consumers at different prices

Question 2

PD based on

Answer 2

1. Individual characteristics
2. Belonging to identifiable subgroups of consumers
3. Quality purchased

Question 3

Necessary conditions

Answer 3

1. Firms must have market power
2. Firms able to identify which consumers are willing to pay more
3. Firms must be able to prevent re-sales

Question 4

Types of PD

Answer 4

1. First degree: Perfect PD: each unit sold to each consumer for their reservation price (WTP)
2. 2nd degree: non-linear PD
3. 3rd degree: group PD

Question 5

1st degree PD

Answer 5

Max TS
GRAPH