Answer to Question #134440 in Economics of Enterprise for Mivasha

Question

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

Answer 1

solution

perfect competition - firms which are in perfect competition do not involve in price discrimination. because if there will be competition in market then firms can not charge according to there willingness.

monopoly - firms which are in monopoly market can be engage in price discrimination because firms have a goal to capture the consumer surplus of market. price discrimination allows the seller to generate the most revenue possible for a product and service in monopoly firm can charge according to their willingness to pay. so price discrimination will come in existence automatically .