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Third-degree price discrimination means charging a different price to a group of consumers based on their different elasticities of demand: the less elastic group is charged a higher price. [22] For example, rail and tube (subway) travelers can be subdivided into commuters and casual travelers, and cinema goers can be subdivided into adults and ...
Price discrimination may improve consumer surplus. When a firm price discriminates, it will sell up to the point where marginal cost meets the demand curve. Some conditions are required for price discrimination to exist: Firms must face a downward-sloping demand curve, i.e. the demand for a product is inversely proportional to its price.
The Ramsey problem, or Ramsey pricing, or Ramsey–Boiteux pricing, is a second-best policy problem concerning what prices a public monopoly should charge for the various products it sells in order to maximize social welfare (the sum of producer and consumer surplus) while earning enough revenue to cover its fixed costs.
Book V: Price Discrimination - This book explores the practice of price discrimination, where a single firm charges different prices for the same commodity. It discusses the concept of price discrimination and raises reflections on its desirability. Book VI: Monopsony - This book shifts the focus to the perspective of an individual buyer.
The three basic forms of price discrimination are first, second and third degree price discrimination. In first degree price discrimination the company charges the maximum price each customer is willing to pay. The maximum price a consumer is willing to pay for a unit of the good is the reservation price.
1. The principal aspect of predatory pricing is that the seller in the market has a certain economic or technical strength which distinguishes it from price discrimination, where competition exists amongst both buyers and sellers. 2. The geographic market for predatory pricing is the country's domestic market which differentiates it from "dumping".
There is a wide range of theory concerned with the root causes of economic discrimination. Economic discrimination is unique from most other kinds of discrimination because only a small portion of it is due to racism, but rather is due to what has been called a "cynical realization that minorities are not always your best customers". [1]
Price means net price and includes all compensation paid. The seller may not throw in additional goods or services. Injured parties or the US government may bring an action under the Act. Liability under section 2(a) of the Act (with criminal sanctions) may arise on sales that involve: discrimination in price; on at least two consummated sales;