Answer to Question #87635 in Macroeconomics for Felicia Francis

Question

Explain briefly why Malaysian and Thailand can practice price discrimination.

Answer 1

The practice of charging different prices to different customers for the same product, although the cost of producing such product is same is called price discrimination. Price Discrimination could be based on person, location, use of the product and time. It can however, be practiced only if there is existence of monopoly, submarkets with different price elasticities of demand, market imperfections and no contact between the buyers from different submarkets, hence no resale of the product from a cheaper market to a dearer market can happen.

As far as, the cases of Malaysian and Thailand markets are concerned, the major sectors and industries are exposed to considerable deregulation including telecommunications, transport, power generation, education and financial services. There is high concentration in Malaysian industries. A few top players in each industry determine market prices and movements. Thus, lack of competition renders them with the power to make superfluous profits without regulation.

     In Thailand, Oligopolies and duopolies are vastly existent. Deficient in competition the sectors like healthcare, Convenience stores, telecoms, brewers, movie theaters and more are dominated by just one or two players again without adequate regulation and control. Despite Thailand’s 1999 trade competition law, there is a little control over such anti- competitive practices giving the monopolists and oligopolists to practice price discrimination backed by market imperfections.