term 2 lecture 8 - monopoly behaviour - third degree price discrimination Flashcards
what is third degree price discrimination?
price paid by the buyers is same if their type is the same. but price may differ across different buyer types examples, senior rail cards, student discounts
what does the demand curve look like in the combined market for third degree price discrination?
because the two groups have different demand curves, the combined demand curve is kinked
what is neccesary for third degree price discrimination?
the two markets need to be seperable and the consumers cannot resell the product to the other market
which group in third degree price discrimination will be charged more?
the one with the less elastic demand
what are the profit maximising conditions for the multi market monopoly?
p1 + ( dp1(y1)/dy1)y1 = p2 + ( dp2(y2)/dy2)y2
or MR1 = MR2
