MGCR 293 Chapter Notes - Chapter 9: Deadweight Loss, Reservation Price, Price Discrimination
19 Sep 2017
School
Department
Course
Professor
Document Summary
In this chapter we will show how some complications such as multiple plants, multiple markets and multiple products affect the pro t maximization conditions (mr=mc) We limit our attention to rms with market power: monopoly, oligopoly, monopolistic competition. We will be concern with rm"s output and pricing decision in the short run. Pro t enhancing possibilities if the monopolist charges multiples prices, sells multiples units by bundling or prices the product internally to other divisions of the same rm. Price discrimination: practice whereby a rm charges different prices to different group of customers for the same good or service. There are basically three types of price discrimination. First degree price discrimination or perfect price discrimination. Perfect price discrimination: when a rm charges a different price for every unit consumed. The rm is able to charge the maximum possible price for each unit which enables the rm to capture all available consumer surplus for itself.
