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Pricing with Market Power, Summary:] uniform pricing is the easiest to…

- - - - How to practice 1st deg PD
        
        under uniformly pricing monopoly:
        
        (Pm, Qm)
        
        consumer surplus is the yellow area
        
        If 1st degree PD is exercised,
        
        P and Q following D curve up to Q=Qc
        
        firm's profit increases by yellow and red areas
        
        CS is zero
        
        able to cover CS& DWL with profit
    - - A practice of charging different prices per unit for different quantities of the same good/service
        
        ~ quantity discounts
        ~ tiered pricing - the practise of charging different prices for different qty
        eg. zalora: free shipping for sales of $40+
      - Third degree price discrimination
        
        A policy of third degree price discrimination offers a different price for each segment of the market when membership in a segment can be observed
        ~ direct market segmentation
        ~ implementation needs fixed identifiable characteristics
        (age, location, nationality etc)
        
        eg: MRT fares for senior citizens vs students
        1st degree: different prices to different individuals
        3rd degree: different price to different groups of individuals
        
        How to pract 3rd degree PD
        
        If third-degree price discrimination is feasible,
        We know that, however much is produced, total output should be divided between the groups of customers so that marginal revenues for each group are equal.
        (MR1 = MR2 )
        We know that total output must be such that the marginal revenue for each group of consumers is equal to the marginal cost of production.
        (MR1 = MR2 = MCT)
- - - - What if per unit charge > MC
        
        not able to maximise profits
      - what if per unit charge < MC
        
        it doesnt increase profit
        -revenue from per unit cost not able to cover total cost