What Are The Different Types Of Price Discrimination?


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Sudipa Sarkar answered
Price discrimination of the first degree implies that the monopolist is able to sub-divide his market to such a degree that he sells each successive unit of the commodity for the maximum price that consumers are willing to pay for that unit. The monopolist, thereby, extracts the entire consumer's surplus.

Price discrimination of the second degree occurs if the monopolist can segment the demand curve in such a way that from each segment a different price is charged which is the lowest demand price of that segment.

Price discrimination of the third degree also divides the market into two or more sub-markets and charges a different price in each sub market. But the price charged in each of the sub-market, need not be the lowest demand price of that sub-market but depends on the demand conditions of that sub-market.

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