Glossary · Micro · Monopoly

Price discrimination

Charging different buyers different prices for the same product for reasons unrelated to cost. It needs some market power, a way to tell buyers apart, and a way to stop resale. First degree charges each buyer their maximum, second degree varies price by quantity or version, third degree charges groups different prices.

Also called: first-degree price discrimination, perfect price discrimination, second-degree price discrimination

Taught in: First-Degree Discrimination

Related terms

Third-degree price discriminationMarket powerConsumer surplus

More from monopoly

Barriers to entryDeadweight loss of monopolyMonopolyMonopoly profit maximizationNatural monopolyThe monopolist's demand and marginal revenue

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