Answer to Question #285708 in Economics for UvM

Question #285708

Suppose you are a monopolist and find that the demand elasticity of your


product is different in two markets. What would be your pricing strategy?

1
Expert's answer
2022-01-10T09:54:12-0500

Assumes that a monopolist firm operates in the market. It is found that the demand elasticity of its product is different in two markets. In this situation, price discrimination can be a good pricing strategy for the monopolist. Under this pricing strategy, different prices can be set in two markets. for the same product. In this way, the airline is a good example. An airline charges different prices for the same service based on submarkets (business class & economic class). In this case, price discrimination applies using discounts, loyalty programs and coupons to target customers of both markets.


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