price discrimination

price discrimination

1. conditions necessary for price discrimination.

   • Monopoly power
     • firms must have some price setting power
   • elasticity of demand
     • there must be different ped for teh product through different groups
   • separations of the market
     • the firm must be able to separate the market into different groups to prevent the goods being resold between consumers
     • exploit consumers as they have a different willingness to pay for goods and services. higher prices with people who aremore willing and able to pay

2. aim: TO INCREASE PROFITS NIGGAAAA!!!

   • helps to load off excess capacity
   • to take rival market share from competitors

3. benefits

   • some consumers can actually buy the product now that it is priced into the market

4. wants to turn consumer surplus into producer surplus