What is price discrimination Why does price discrimination o

What is price discrimination? Why does price discrimination occur? Who does it benefit?

Solution

Price discrimination is a generally related to the monoply market structure. price discrimination means when a business charges different prices from different set of consumers for the same product.

Price discrimination occures when there is only one supplier or the supplier has the control over all the market , then the supplier is only one to decide the pricing. So if he has the knowledge related to price elasiticies related to each set of consumers and there is also be barriers to consumer swicthing to make price discrimination effective or implement.

It can also be in case of consumer group where bulk order is needed.

Ths supplier gains most from the price discrimination. However, it might also benefits the consumers with big order sizes.