Answer to Question #127619 in Economics of Enterprise for Brett

Question

Discuss and motivate whether the following market structures can engage in price discrimination.
1 Perfect competition
2 Monopoly

Answer 1

Firms in perfect competition markets do not engage in price discrimination.

Firms in monopoly markets may engage in price discrimination. This is because they want to capture the market's consumer surplus. This price discrimination allows the seller to generate the most revenue possible for a product or service.