Question

What two factors must be in place to implement and enforce price discrimination in a market?

Which of these two factors make drug companies reluctant to practice price discrimination low income countries?

Answer 1

Ans.
Price discrimination is generally on the basis of gender, colour, income, etc. Usually the price discrimination take place when the identical commodities and services are sold at various discriminated prices but by the same seller. Either by discount, premium pricing, retail incentives, gender based discounts, financial aid, etc. The factors which are mandatory to be met for peice discrimination are, that teh firm must contain the market power and it should be able to recognize the difference in the demand for their commodity.
For a pharmaceutical company, i.e., a drug dealing firm is reluctant to practice the price discrimination in low income economies because in low income economies, the price diacrimination can be on the basis of income or gender. So, the drug firms have the market power, as in such economies the health and sanitisation is an issue to be dealt with.