ECON 1B03 Lecture 1: ECON 1B03- Week 10 Module 3

• School: McMaster University
• Department: Economics
• Course: ECON 1B03
• Professor: Hannah Holmes

Document Summary

In order to price discriminate, the firm must have some market power and be able to segment the market according to consumers" willingness-to-pay: perfect price discrimination (also called first degree price discrimination): If the monopolist knows exactly the willingness-to-pay of each customer, it can charge each customer a different price = exactly his/her willingness-to-pay. work done. Best example is an accountant who charges each client a different price for. Unit 9. 3: the monopolist can keep selling its output as long as the price received covers the firm"s. Mc (it would still be making a profit on each good). Third degree price discrimination: also called ordinary price discrimination, usually, a firm can distinguish between different markets for its good, much easier to do in practice than perfect price discrimination and we see it all the. It can then charge different prices in each market. time. Examples of price discrimination: movie tickets, bus fares, discount coupons, financial aid, quantity discounts.