ECON-221 Lecture Notes - Lecture 28: Reservation Price, Price Discrimination, Aldi
24 Sep 2020
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Laws or inability to learn reservation price of consumers can prevent monopolist from engaging in first degree price discrimination. Other forms of price discrimination: second degree price discrimination. The monopolist charges different prices depending on the quantity demanded by each consumer. If consumer demands high quantity, the unit price charged is lower comapred to unit price charged at a smaller quantity demanded. By offering discounts the monopolist can distinguish between consumers with low and high reservation price. Less profit is made than when using first degree price discrimination. Italians and americans better off as the price they pay is lower than their reservation price: thus, there is an overall shift of surplus from monopolist to consumers. Oligoply is a market structure that featuers a small number of firms. The action of one firm have a direct impact on other firms (i. e. there is strategic.
