Question

Briefly discuss the necessary conditions for price discrimination. What do you

understand by the perfect price discrimination?

Answer 1

Conditions that must be met for price discrimination to occur are;

1) The firm must have market power.

2) The firm must be able to recognize differences in demand.

3) The firm must have the ability to prevent arbitration, or resale of the product.

Perfect price discrimination also called First-degree discrimination, or , occurs when a business charges the maximum possible price for each unit consumed