price discrimination

price discrimination

1. makes two sales of a product similar to two different rates of return is based on the subjectivity of human taste

2. cannot occur in a competitive market

   • because a disadvantaged buyer (the one who has than paying a price above marginal cost, or a price that includes a higher rate of return for the product) can refuse to pay and find another vendor who provides said product at a price competitive

3. Consumer tastes and preferences

   • the subjective interest of the human being comes out collation in the context of value, and is the value that each customer attributes to a The same product varies as soon as it is willing to pay
   • high elasticity
     • are those whose response to change the price of a product will be significant
   • low elasticity
     • customers whose demand for a product will suffer little or no change due to price variation

4. degrees of price discrimination

   • Pigou (1920), “these three types of discrimination differ by degree of information that the monopolist has on the willingness to pay of consumers as well as by the possibility to avoid arbitration ”
     • Discriminación de Primer Grado o Perfecta
       • the different production units are sold to different prices that may also differ according to what form is the buyer; when this guy exists of discrimination each of the units is sold the individual who values ​​it the most, that is the price maximum you are willing to pay for it. For the Therefore, in this market, consumers do not have no surplus, everything goes to the product
     • Second Degree Discrimination
       • It is a limited version of the price discrimination of the first grade where prices are fixed by sections in depending on the quantities consumed by the client, presents when there are many buyers within each market and, at the same time, there are differences between buyers in terms of the number of units of the good that they buy, type 2 price discrimination refers to a price structure where a lower price is charged for the additional units consumed
     • Third Degree Discrimination
       • Third degree discrimination occurs when the monopolist can obtain information on willingness to consumers pay through external signals like age, occupation, gender, geographic location, among others, ensure that the company lacks information on the individual demand functions but can identify different consumer groups depending on some characteristic by subsequently setting different prices it refers to the differential collection of prices with respect to cost, but when this is done in the different markets facing the producer. It is necessary to understand that the same good or service can have two or more markets

5. Consumer surplus

   • Consumer surplus is the difference between the total profit we get from a good or service and its market price.

6. arbitration

   • is the practice of taking advantage of a difference of price between two or more markets: make a combination of complementary transactions that capitalize on the price imbalance.

7. Elasticity of Demand

   • It is a concept that in economics is used to measure the sensitivity or response capacity of a product at a change in price. In principle, the elasticity of demand is defined as the change percentage in quantity demanded, divided by the percentage change in price. The elasticity of Demand can be expressed graphically through a simplification of demand curves.