Answer to Question #278154 in Microeconomics for Nish

Question

Which competitive markets can use price discrimination as a pricing strategy and why?

In what ways three degrees of price discrimination are different from each other? How can

insurance industry use this practice in extracting surpluses from consumers?

Answer 1

1. Price disparity can occur in dictatorial, monopolistic competitive, or oligopolistic marketplaces. Customers Who Can Be Recognized The market must be easily fragmented so that clients with varying levels of price elasticity may be recognized and served accordingly.
2. First, the supplier must understand the absolute top price that each customer is ready to spend. Second degree — the cost of a commodity or service changes depending on the amount required. Third degree — the cost of a good or service fluctuates depending on factors including geography, age, gender, and socioeconomic position.