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Examples of Price Discrimination

Examples of Price Discrimination. Rebates & Coupons Priceline.com (tickets non-transferable) Sequential releases of movies (Theaters, DVD, Cable, air TV). First Degree Price Discrimination. $.

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Examples of Price Discrimination

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  1. Examples of Price Discrimination • Rebates & Coupons • Priceline.com (tickets non-transferable) • Sequential releases of movies (Theaters, DVD, Cable, air TV).

  2. First Degree Price Discrimination $ First Degree Price Discrimination from a welfare point of view. Is it efficient? Is everybody better off? MC P* D MR Q

  3. To price discriminate the monopolist must be able to prevent resale. To practice first degree price discrimination requires more information than any real firm has.

  4. Price DiscriminationA Monopolist in Two MarketsThird Degree Price Discrimination MC Pa Pc MR MRc MRa Dc Da Qa Qc Qa+Qc Qa Qc

  5. MRa P0 P1 MR MRc

  6. Elasticities and Price Discrimination MRa=Pa(1-1/|ha|)= Pc(1-1/|hc|)=MRc If hc>ha then Pc<Pa The group with a more elastic demand is charged a lower price. The monopolist charges lower prices to price sensitive consumers

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