Price discrimination

• Price discrimination is where an identical good or service is sold to different customers at different prices for reasons not associated with cost
• Examples of price discrimination include geographical, time, age
• First degree price discrimination is when a firm can charge a seperate price to each individual customer - each unit is sold for the maximum price. There is no consumer surplus
• Second degree price discrimination is when a firm charges a different price for different quantities/quality of product
• Third degree discrimination is where the same product is sold at different prices in different markets
• A monopolist can use high barriers to entry to price discriminate. This is defined as selling the same product to different markets at different prices. This allows the firm to capture more consumer surplus and so increase profits