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price discrimination
- 2. Presented to: ImranAlam Presented by : Mushabab Alam(0038) Usama Akhtar(0032)
- 3. Outlines of Topic Price discrimination Conditions of price discrimination Degrees of price discrimination Graphical representation Disadvantages of degrees
- 4. Price discrimination Pricediscrimination occurs when a business charges a different price to different group of consumers for the same good or services. Examples Occupational discounts Time of Purchase
- 5. Examples Occupational discounts:This price discrimination is present when individuals receive certain discounts based on their occupation. Time of purchase: That price discrimination we get with the help of time in some conditions. According to age
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- 7. Conditions First Condition Firm must have a market power Second Condition Difference in PED Third Condition No resale
- 8. First Conditions Firmmust have a market power Market power is the ability of firm to profitably rise the market price of a good or services over marginal cost. Its like a monopoly. In perfect competitive markets market have no market power.
- 9. Second Condition Differencein PED Charge a higher price to group with low PED Charge a low price with a more Price Elastic Demand
- 10. Third Condition Noresale Easier with services than goods Time limits-Product bought at certain time Identification System Electronic-digital ways of protecting usage
- 11. Examples Popcorns availablein a local market and theaters Airline charges Education fee
- 12. Types of pricediscrimination First degree price discrimination Second degree price discrimination Third degree price discrimination
- 13. First degree pricediscrimination It is the practice of charging each consumer the maximum amount he/she is willing and able to pay. First degree price discrimination occurs when each unit of output is sold at a different price such that all consumer surpluses go to the seller. It is also known as perfect price discrimination.
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- 15. First degree disadvantages Make consumers pay the maximum amount for the same thing for which other is giving less amount. Consumer surplus is taken by the supplier
- 16. Second degree pricediscrimination In this price varies according to quantity sold. When large number of quantity is sold then the unit price of the product is low and if less number of quantities is sold then unit price is higher for the same quality of the products and services. But in a range It is also known as Economies of scale.
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- 18. Examples When youbuy 1 kg Apples you will cost more amount than when you buy hole Box of Apples. When you buy more than one shirt may be 2 or 3 from seller then he will cost you less price per shirt.
- 19. Second degree disadvantages It is mostly useful for industrial people but not for a common person. So it depends on situation by which you are dealing.
- 20. Third degree pricediscrimination Price varies by customer segment. Third price discrimination occurs when different prices are charged to groups of buyers.
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- 22. Examples Some cinemascost higher price from adults than children. Some cinemas cost higher price for night shows than morning shows.
- 23. Third degree disadvantages It can seem unfair to pay more than somebody else for the same good. Some suffers and some are able to afford to buy .
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Editor's Notes
- #5 Occupational discounts: This price discrimination is present when individuals receive certain discounts based on their occupation. An example is when active military members receive discounts CINEMA EXAPLE at day time they cost low price at night they cost high price
- #6 CMH hospital Gives free medical to medical
- #8 There are three conditions that are necessary to explain price discrimination
- #14 Firm charges each customer the most the customer would be willing to pay for each unit he or she buys By assuming that firms could somehow find out maximum price customers would be willing to pay for each unit of output it sells It could increase profits even further, but at expense of customers