Price Discrimination

Price Discrimination
price discrimination
when a producer sells the exact same product to different consumers at different prices
market segment
different groups of consumers, depending on their PEDs, wealth...
1st degree
consumer pays the price they're willing to pay
2nd degree
prices depend on how much consumers purchase
3rd degree
each market segment is charged a separate price depending on their PED
consumer surplus
the additional benefit or utility that consumers receive when they pay a price lower than what they were willing to pay
price elasticity
how important the product is for the consumer
a market structure where a few firms dominate the market
perfect oligopoly
when oligopolistic industries produce identical products
price rigidity
not competing using price, competing with non-price competition
imperfect oligopoly
when oligopolistic industries produce different products
collusive oligopoly
when firms collide to change the same price for their products
forumal collusion
firms openly agree on the price they will charge
tacit collusion
when firms charge the same price without any formal agreement
non-collusive oligopoly
when firms in an oligopolistic industry compete amongst themselves and there is no collusion and adopt strategic behavior
game theory
considering the optimum strategy that a firm could undertake int he light of different possible decisions by rival firms
non-price competition
marketing or advertising
a market dominated by a single seller
actual monopoly
where the firm holds >25% of the market share
natural monopoly
a market that runs most efficiently when one large firm supplies all of the output
anti-competitive behavior
monopolies attempt to stop competition by adopting restrictive processes
legal barriers
a firm may be given legal rights to be a monopoly
brand loyalty
customers purchase the product despite fluctuations in price because they have trust for the brand