Price discrimination

Question 1

What is price discrimination?

Answer 1

Charging different prices to different customers for the same product or service, based on different willingness to pay

Question 2

What are the conditions necessary for price discrimination?

Answer 2

• Must be able to identify different groups of customers for the product
• At any price, the different customer groups must have different price elasticities of demand
• Markets must be separated to prevent resale