Answer to Question #212927 in Microeconomics for Ntandokazi

Question

Why is price discrimination not possible under the perfect market

Answer 1

Solution:

Price discrimination refers to a pricing strategy where a firm charges different prices to various consumers for similar products or services. Firms utilize this strategy to make the most revenue possible from every consumer.

Price discrimination strategy is not possible under the perfect market since firms in a perfect market are price takers, that is they can only take the market price as given and they are not in a position to make price selection of any kind. Also, in a perfect market, there are numerous firms competing for a price.

Price discrimination is only possible under monopoly, monopolistic competition, and oligopolistic markets since consumers have no other places to buy.