Call Us Now: 8185279935 Call
Homework Help
Homework Help
Homework Help
View Details
Homework Help
Assignment Help
Homework Help
Assignment Help
View Details
Assignment Help
Online Tutoring
Online Tutoring
Online Tutoring
View Details
Online Tutoring
Home » Economics Homework Help » Microeconomics Help » Price Discrimination Conditions
Price Discrimination Conditions
Two fundamental conditions are necessary for the price discrimination to become possible. First, price discrimination can occur only when if it is not possible to transfer any unit of the producer from one market to another. In other words, a seller can practice price discrimination only when he is selling in different markets which are divided in such a way that product sold by him in the cheaper marker cannot be resold in the cheaper market. Price discrimination by the original seller will break the dearer market. Buyers in the dearer market of the original market of the original market will instead of buying from him will buy the product from the buyers of his cheaper market. Thus, a seller can charge different prices in the two markets when there is no possibility of the market product being transferred from the cheaper market to the dearer market.

Second essential condition for price discrimination to occur is that it should not be possible for the buyers in the dearer market to transfer themselves into the cheaper market to buy the product or service at the lower price. For instance, if a doctor is charging a smaller a smaller fee from the poor than the rich, then his price discrimination will break down if a rich man can pretend to be poor and pay a poor man’s charges to the doctor.

It is clear from the above that if the price discrimination to become practicable, neither the unit of the good nor the unit of demand can be transferred from one market to the other. In other words, there should be price not be any seepage or communication between the two markets. Thus price discrimination depends upon the ability of the seller to keep his two markets quite separate. If he is not able to keep the different markets separate, the price discrimination by him will break down. Price discrimination is not possible in the following cases.

1. The nature of the commodity: the nature of the commodity or service may be such that there is no possibility of transference from one market to the other. The most usual case is the sale of direct personal services like that of a surgeon or lawyer. The surgeons usually charge different fees from the rich and the poor for the same kind of operation. This is possible for them since the services has to be delivered personally by the surgeons and therefore it cannot be transferred. Neither is it possible for the rich men to assume to be poor so easily in order to pay the smaller fee.

2. Long distances or tariff barriers: discrimination often occurs when the markets are separated by long distance or tariff barriers so that it is very expensive to transfer goods from a cheaper market to be sold in the dearer market. A monopolist manufacturer at Chennai may sell his product in one town, say Kolkata at $ 20 and in another town say Delhi at $15. If he transport cost between Delhi and Kolkata is greater is greater than $5 per unit it will not be worthwhile for the buyers in Delhi to transfer the goods to Kolkata at their own.

Services:- Price Discrimination Conditions Homework | Price Discrimination Conditions Homework Help | Price Discrimination Conditions Homework Help Services | Live Price Discrimination Conditions Homework Help | Price Discrimination Conditions Homework Tutors | Online Price Discrimination Conditions Homework Help | Price Discrimination Conditions Tutors | Online Price Discrimination Conditions Tutors | Price Discrimination Conditions Homework Services | Price Discrimination Conditions
Submit Your Query ???
Topics
Economies In Consumption Economies In Production Welfare Economics Theorem Market Failure Pareto Criterion Welfare Economics Value Welfare Economics Asymmetric Information Present Values Insurance Market Intertemporal Choice Intertemporal Analysis Market Signalling Perpetuity Stocks Versus Flows Lemons Market Principal Agent Problem Moral Hazard Oligopoly Characteristics Oligopoly Price Determination Firms Interdependence Price Discrimination Oligopoly Oligopoly Price Output Price Discrimination Degrees Price Discrimination Conditions Price Discrimination Possibility Price Discrimination Timing Profit Maximization Price Theory Profit Assumption Profits Theory Economic Rent Rise Selling Costs Effects Selling Costs Role Economic Systems Capital Formation Comparative Statics Competitive Markets Economic Dynamics Economic Statics Economic Growth Microeconomics Importance Inductive Method Production Inefficiency Micro-Macro Interdependence Microeconomics Scope Scientific Theory Economic Laws Nature Production Possibility Curve Economic Hypothesis Economics Scarcity Inductive Methods Steps Consumer Surplus Applications Cardinal Utility Demand Changes Complements And Substitutes Consumer Surplus Concept Consumers Equilibrium Consumer Surplus Demand Determinants Demand Curve Demand Schedule Elasticity Tax Demand Extension Income Elasticity Indifference Curve Indifference Curve Approach Indifference Curves Demand Theory Substitution Marginal Rate Marginal Utility Rate Market Demand Curve Market Demand Function Marshalls Consumer Surplus Consumer Surplus Measurement Price Elasticity Measurement Preference Hypothesis Price Consumption Curve Price Elasticity Importance Price Elasticity Determinants Demand Price Elasticity Revealed Preference Theory Substitution Elasticity Demand Law Interest Classical Theory Productivity Concepts Rent Concepts Demand Factor Determinants Fishers Interest Theory Functional-Personal Distribution Interest Keynes Interest Theory Land, Rent, Cost Distribution Theory Loanable Funds Marginal Distribution Profits Dynamic Theory Quasi Rent Rent Concepts Rent Ricardian Theory Risk And Uncertainty Factors Supply Wage Determination Average Fixed Cost Average Total Cost Capital Douglas Production Function Compensation Principle Marginal Returns Capital Growth Scale Economies Technical Substitution Entrepreneur External Economies Supply Factors Production Factors Isoquants Properties Human Capital Profit Innovation Theory Interest Theories Isoquants Labour Land Production And Cost Linear Production Function Long Run Equilibrium Marginal Cost Marginal Substitution Monopoly Characteristics Monopoly Price Monopoly Capacity Monopsonistic Discrimination Opportunity Cost Production Function Returns To Scale Capital Role Supply Rent Concepts Fixed Variable Costs External Economies Types Advertising Effects Average Revenue Collusive Oligopoly Competitive Strategy Contestable Markets Dominant Strategy General Equilibrium Monopolistic Equilibrium Monopoly Features Industry Equilibrium Firm And Pricing Supply Curve Marginal Revenue Market Market Forms Market Cartels Monopoly Measurement Monopolistic Competition Monopoly Monopoly Sources Newmann Game Theory Partial Equilibrium Price Determination Price Leadership Thumbs Price Rule Product Differentiation Rent Control Sales Maximization Selling Costs Static Dynamic Stability Time Element Price
To book a free session write to:- tutoring@thehomeworkhelp.co.uk or call 8185279935