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What are the conditions necessary for a firm to be able to price-discriminate in two markets?...

What are the conditions necessary for a firm to be able to price-discriminate in two markets? Identify different degrees of price discrimination.

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Answer #1

Necessary condition for price discrimination are

- Market power

- no arbitrage or reselling is allowed

- market should be segmented/separated

- market should have different elasticity of demand

There are three type of price discrimination

first degree ya perfect price discrimination is when seller charges each consumer equal to their maximum willingness to pay

second degree price discrimination When consume discriminates on the basis of number of quantities sold

and third degree price discrimination when consumer charges different price due to geopgraphical difference, different time period or due to all other left reason like personal

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