Price Discrimination Assignment Help

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BookMyEssay is one place that has been helping students for a long time now. Our experts in the field of economics render excellent Economics homework writing help to students and ensure covering possibly every area of the subject. One area in the field of economics that baffles a number of students is price discrimination. Students have a hard time learning about the area, let alone doing an assignment in it.

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Introduction of Price Discrimination

Price discrimination is basically selling same products to varied customers at diversified prices. The variation does not occur on the basis of a concrete ground. Generally, the application of price discrimination occurs most in monopoly due to full control over the market supply. The monopolist is able to sell a specific product in varied markets or to diversified purchasers at different rates. Because of such discrimination in prices, the monopoly becomes a discriminating monopoly. In addition, Price discrimination is the sale of theoretically identical products at rates not proportional to the marginal cost. There are a few types of price discrimination, namely time discrimination, territorial discrimination, and use discrimination.

Price discrimination has some conditions. Selling similar products to different groups of customers is possible owing to the fulfillment of certain conditions. The reason is simple. People are practical. They would not pay higher for the same product. The most crucial factors to consider in this aspect are price flexibility, partial competition, and arbitrage. A business performs successfully in the market with respect to price discrimination with a specific degree of demand power in the market. The demand needs to be the downward slope of the curve of market demand. Because it is not possible for a business to apply price discrimination is a market where purchasers and sellers act as price-takers.

It is possible to make use of price discrimination when the business can sell the product over the cost of margin. In addition, selling the product over marginal cost for a discounted price to different customers groups would negatively impact the price discrimination. Being able to lessen the price for a specific group by the business depends upon the differences between that particular group and rest of the customers.

Another precondition for price discrimination is the requirement of a price flexibility of customer groups for purchasing the products for varied costing. The reason is that elasticity is the power of negotiation for the customer. Therefore, it is not wise to think that some customers with the same negotiation power would purchase the same product with varied pricing. Selling the same product in varied markets having diversified price elasticity augments the profit for the business. In such a case, the marginal income from the sale of the same product for varied pricing in diversified markets would become diversified size for varied markets. In this situation, it is possible for the business to augment the profit by selling a little in markets where marginal income and demand elasticity are lower and selling more in markets where marginal income and demand elasticity is higher.

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The advantage of price discrimination is that businesses are able to see increments in their revenue. Businesses are able to sell products even to the customers who would not be buying them at normal prices due to different offers being available. However, the disadvantage is that some customers would be paying higher, which is not good from the customers’ point of view. A decline is possible if there is a surplus on the customers’ end.

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