What Is a Price Discrimination Monopoly?

Price discrimination is essentially a kind of price difference. It usually refers to the fact that when a supplier of goods or services provides different recipients with the same grade and the same quality of goods or services, they use different sales prices. Or fees. If the operator does not have a valid reason, the same goods or services and different selling prices for several buyers constitute price discrimination. Price discrimination is an important monopoly pricing behavior, and it is a pricing strategy for monopoly enterprises to obtain excess profits through differential prices.

price discrimination

Price discrimination: also known as price discrimination

1. Manufacturers must face down

Direct difference pricing

Direct difference pricing means that the manufacturer can determine the difference between consumers

according to

Monopoly firms use price discrimination to make a profit.

Discrimination is differential treatment. Take price discrimination as an example, that is, the same product is sold to different people and charged different prices, which forms price discrimination. However, by extension, there are many forms of discrimination that give different treatment to different people in the same area of life.

"Different people" are not only different in "economic characteristics", but also different in "ethnic characteristics", "gender characteristics", or "regional characteristics". "Different treatment" can be either "different price treatment", "different employment treatment", or "different reputation treatment". Therefore, in addition to "price discrimination", correspondingly "

In addition to the

(1) Coupon: Consumer screening

Manufacturers often distribute coupons for their products or services through newspapers and magazines and other channels. Consumers who hold the voucher enjoy certain discounts when compared with consumers who do not have the voucher, which is more attractive to low-income groups. Through coupon discounts, consumers with high elasticity of demand prices pay lower prices, while consumers with lower elasticity pay higher prices. Here, manufacturers differentiate between high- or low-income customers and let customers make their own choices, which greatly reduces the information requirements of price discrimination.

(2) Double charge

Double charging means that the monopoly manufacturer requires the consumer to pay first to obtain the right to purchase a product, and then the consumer pays an additional fee for each unit they wish to consume, that is, an entry fee and a user fee behavior. For example, the telephone service fee charged by the telecommunications company includes the initial installation fee and monthly call fee. When a monopoly firm faces many consumers with different levels of demand, there is no simple formula to calculate the best double charge standard. But there is always an alternative: a lower entry fee means more entrants and more profit from the sale; but as the entry fee decreases and the number of entrants increases, the Profits will fall, so the problem is to choose an entry fee that leads to the best number of entrants and thus the greatest profit.

(3) Bundle sales

Bundle sales refer to the fact that manufacturers require customers to buy one of their products while purchasing another of its products. Under the condition that there is a certain difference in customer preferences and the manufacturer cannot implement price discrimination, the use of this strategy can increase the profit of the manufacturer. When demand is negatively correlated, bundled sales are more profitable than individual sales; when demand is positively correlated, bundled sales do not necessarily bring additional revenue to the manufacturer.