T5 - Price Discrimination 2.0 Flashcards
what is price discrimination
when firms sell the same good to different groups of consumers for different prices
what is first degree price discirmination
charging the max price consumers are willing and able to pay
what is second degree price discrimination
different prices based on quantity or chocies
what si third degree price discrimianton
diff prices for different segments of the market
examples of different demographics in 3rd degree price disc
age
incoem group
time of use
conditions neccessary for price discrimiantion
price making ability
ifnormation to seprate the market (diff peds)
be able to prevent reseale and seperate the market
low admin too seperate the market
what is proper term for resale into sup markets
price seepage
are there any differences in costs of production for price discrimiantion
no
how cna firms haev price setting ability
monopoly power
with regards to ifnoramtion what must firms haev it on
be abel to sepertae teh arket into diferents price elasticicties of demand
what happens with consuemr surplus in first degree price disc
all of consumer surplsu turned to monopoly profit
examples of second degree price discrimination
loyalty cards for frequent buyers
colelction fo coupons from maagazines
eneergy is cheaper after high qty of units boughts
why may 2nd degree pd be called indirect pd
as consuemrs have a chocie as to the price they are paying
why are soem chocies cheaper in 2nd degree pd
as they impose costs to consumers
exampels of costs imposed on consumers in 2nd dgeree
buying in bulk
unsociable hours
collecting coupons
when does 3rd degree price discrimination occur
when a firm is abel to segement the market into different peds
econ dal cons of pd
alloactive innefficiny
inequality
anti comeptitive pricig
econ dal pros of pd
dynamic effienc
economies of scale
soem poeple benefit
cross subsidisation of proft
ahmad pros of pd to the firm
firms offer unprofitabel srvices
spread demand
avoid congenstion
inc profit
eco of scale
effinecint use of infrastructure
better use of space
how si better use of spcae a pro of pd for firms
able to clear execss supply and existign stocks quickly to cater and stock newer shit thtas in demand
how is effecient use of infrasrtcuture a pro to firms
those with high fixed costs gernally have minimal mc , so the cost to add oen more consumer isnt much menaign they can turn that added revenue into profit or cover new costs
cons of price discrimiantion firms mr ahmad
admin costs
mr ahamds adv of prd
beenfits to soem groups
enables felxibility
geenates psotiiev externalities
how does pd enabel flxibility for xonusmers
consuemrs are abel to match pruchasign and shopping to them