What is price discrimination give example?
Price Discrimination is a strategy that businesses use to maximise revenue by charging customers different prices based on their willingness to pay. For example, cinemas frequently offer different prices for adults, seniors, and children. They also offer deals for specific days of the week.
What is the meaning of price discrimination?
Price discrimination is a sales strategy of selling the same product or service to different customers for different prices. First-degree price discrimination involves selling a product at the exact price that each customer is willing to pay.
What conditions are required for price discrimination?
Price discrimination is possible under the following conditions: The seller must have some control over the supply of his product. Such monopoly power is necessary to discriminate the price. The seller should be able to divide the market into at least two sub-markets (or more).
What is price discrimination in monopoly?
What is price discrimination in a monopoly? Price discrimination in a monopoly is a practice of charging different prices for the same product. Monopolies usually have more control over suppliers than regular sellers, which means they can significantly influence the suppliers’ selling prices.
What is price leader?
A price leader is a company that exercises control in determining the price of goods and services in a market. The price leader’s actions leave the other competitors with few or no options other than to adjust their prices to match the price set by the price leader.
What is direct and indirect price discrimination?
Direct price discrimination is based upon the identity of the buyer, while indirect price discrimination involves several offers and achieves price discrimination through customer choices. Two common examples of indirect price discrimination are coupons and quantity discounts.
What is horizontal and vertical price fixing?
price-fixing, any agreement between business competitors (“horizontal”) or between manufacturers, wholesalers, and retailers (“vertical”) to raise, fix, or otherwise maintain prices. Many, though not all, price-fixing agreements are illegal under antitrust or competition law.
What do you mean by discriminating monopoly?
A discriminating monopoly is a market-dominating company that charges different prices—typically, with little relation to the cost to provide the product or service—to different consumers.
What is predatory pricing?
Predatory pricing is the illegal act of setting prices low to attempt to eliminate the competition. Predatory pricing violates antitrust laws, as it makes markets more vulnerable to a monopoly.
What is the concept of price discrimination under monopoly discuss the various forms of price discrimination?
i. Refers to a price discrimination in which a monopolist charges the maximum price that each buyer is willing to pay. This is also known as perfect price discrimination as it involves maximum exploitation of consumers. In this, consumers fail to enjoy any consumer surplus.
How can an oligopoly cause market failure?
Oligopoly cause market failure in the following ways; interdependence, firms acting under oligopolistic conditions are said to be interdependent which means they cannot act independently of each other, therefore actors have to initiate strategies in decision making to either compete or collude(overt,covert,tacit ).
What are the differences between perfect competition and monopolistic competition?
In perfect competition, the demand and supply forces determine the price for the whole industry and every firm sells its product at that price. In monopolistic competition, every firm offers products at its own price. Entry and Exit are comparatively easy in perfect competition than in monopolistic competition.
What is market cartel under oligopoly?
Oligopolistic firms join a cartel to increase their market power, and members work together to determine jointly the level of output that each member will produce and/or the price that each member will charge. By working together, the cartel members are able to behave like a monopolist.
What is price war in oligopoly?
Price wars are often short-lived and intense periods when competing businesses lower their prices in a bid to win extra market share, generate improved cash-flow and perhaps increase total revenues.
What is arbitrage in price discrimination?
Arbitrage is a process where traders, acting as either buyers or sellers, can exploit price differences for identical products – buying where the price is lower and selling where it is higher. The effect of this is to make prices converge, given the different effects of buying and selling in the market.
What is the difference between vertical and horizontal restraints?
If you have an anti-competitive agreement between a manufacturer and distributor, for example, that would be a vertical restraint. This is different from a horizontal restraint, which is an agreement between competitors at the same level of production, distribution, or supply.
What is price liner?
: a system of retail merchandising under which a merchant sets up fixed prices for various categories of goods and plans his buying and other expenses so as to be able to supply goods regularly at such prices price lining is especially practical in stores that employ comparison shoppers.
What is the characteristic of monopolistic competition?
Non-Price Competition: The main characteristic of monopolistic competition is that under it different firms without changing the costs of products compete with each other like the example of companies producing ‘Surf’ and ‘Ariel’.