M B A 8620 Chapter Notes - Chapter 10: Price Discrimination, Deadweight Loss, Economic Surplus
4 Oct 2016
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Chapter 9 talked about monopoly"s optimizing their profit by using a uniform pricing. Deadweight loss is the foregone value of these potential sales in excess of the cost of producing the good. Charging consumers different prices for the same good based on individual characteristics of consumers, on membership in an identifiable subgroup of consumers, or on the quantity purchased by the consumers. Like student prices because they are more price sensitive: two-part pricing. Charging higher prices in periods of peak demand than at other times i. e. ticket prices for flights from cold northern cities to hawaii are higher in the winter months when demand is higher than in the summer. Which firm can price discriminate: for a firm to price discriminate successfully three conditions must be met. A monopoly, oligopoly firm or a monopolistically competitive firm might be able to price discriminate, however, a competitive firm cannot because it has to sell its products at the given market price.
