ECON 20 Lecture Notes - Lecture 11: Price Discrimination, Perfect Competition, Budget Constraint
19 May 2020
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If competition frequently means discrimination, why is discrimination missing from standard economic models? (hint: outside of perfect markets, are there any reasons to prefer dealing with one party instead of another?) No search costs in a perfect market so discrimination is impossible. In the real world, having trouble selling, people aren"t all there at one so expect discrimination bc you want to sell more (why give a bigger buyer a better deal) Eq model means you can"t see what you do outside of eq, everybody gets charged the same price, but the process of getting to eq involved price discrimination but you can"t see any of it in the model. *friedrich hayek, the meaning of competition," in individualism and economic. In the pc model, the way economists think about this stuff, no room for rivalry because everyone"s in eq,, you aren"t competing because can sell however much they want nothing businessmen can do in that environment.
