Price discrimination

The definition is where a monopolist charges different prices for the same product in different market.

It has 3 degree :

1. when each customer is charged a different price for
2. When the same customer is charged different prices depending on volume bought
3. when the market is divided into groups and each group is charged a different prices

The supplier has information showing that different groups of customers have different elasticity they may do the price discrimination .Because different customers are prepared to pay different prices it really depends on customers' income or other factors .By the way the discrimination can only work if the different customers can not exchange the product.For example the flight ticket.

The market can be divided by Ages which is student or elder people can get some discount sometimes E.G. bus tickets . And can be divided by nationality and time for example Rush hour prices for train tickets are higher because demand is inelastic at these time .And the market can divided by income so if people who income is higher is able to pay more the suppliers know that .

Many people think price discrimination is not fair .But there is a argument that say this can help people who have low income .People who has low income can benefit from it .Which means low income people can have some services or products by a lower price .Which is a welfare for the society.But why richer people have to pay more ... so there is a argument .