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PRICE DISCRIMINATION (Conditions to take place (Segregation of market: (a)…
PRICE DISCRIMINATION
Definition
The practice of charging different prices for different groups of consumers for the same product or for different units of it and it is not due to differences in cost.
Conditions to take place
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Segregation of market:
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c) Consumers are not able to purchase in the lower-price market and sell in the higher-priced market.
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Consequences
Costs
Loss of consumer surplus and an increase in producer surplus, resulting in an increase in inequity,
Benefits
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1) Higher output and allocative efficiency under first-degree price discrimination, as price is always equal to actual revenue and marginal revenue.
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