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Discuss how the vast amount of information available on the internet allows for companies to collect...

Discuss how the vast amount of information available on the internet allows for companies to collect all consumer surplus for themselves

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Answer #1

A company is able to collect all the consumer surplus for itself when it charges each customer a price equal to maximum willingness of that customer.

However, to know the maximum willingness to pay of a customer, substantial information with respect to tastes and preferences of the consumer is needed. Also, how consumer adjust his or her demand with respect to price change also needs to be known.

People reveal multitude of information about themselves on the internet. This vast amount of information enables the companies to gather all the relevant details regarding tastes and preferences of the consumer including their maxmimum willingness to pay for a product or service.

This way companies are able to price their products or services in such a manner that not only they be able to collect all consumer surplus but also be able to maximize their profit and revenue.

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