Price Discrimination

Question 1

What is price discrimination?

Answer 1

Charging different prices to different market segments for the same good or service.

Question 2

What 3 conditions does there have to be for price discrimination?

Answer 2

1. Barriers to entry and exit
2. Identifiable market sectors by price elasticity
3. The firm must be able to keep the market secorts seperate a low cost to prevent resale.

Question 3

What 3 techniques are used to keep the markets seperate?

Answer 3

1. Time of day e.g. rail
2. Geography e.g. Cars
3. Age e.g. The undergroun or buses