price discrimination Flashcards
1
Q
What are conditions necessary for price discrimination?
A
- Sellers must be price makers
- Sellers must be able to differentiate between buyers
- Resale must not be possible
2
Q
What are assumptions of price discrimination?
A
- Seller is a pure monopolist
- Market entry is blocked
3
Q
What is first degree price discrimination?
A
Where the seller charges each buyer the maximum price they are willing to pay
4
Q
What is third degree price discrimination?
A
Where a seller can identify different buyer groups and charge different prices to these groups
5
Q
How can buyers be grouped?
A
- Age
- Country
- Time frame
