Is Price Discrimination Always Efficient for Firms?

소개글

영어로 작성한 미시경제 리포트입니다. 가격차별이 효율적인 경우와 그렇지 않은 경우를 나누어 분석하였습니다.

목차

1. Introduction

2. General Concepts of Price Discrimination

3. Conditions for Price Discrimination

4. Factors that Bar Functioning of Price discrimination

5. Conclusion

본문내용

This essay was started out of curiosity about the reason why some firms do not engage in price discrimination although it is generally believed that price discrimination makes profits for monopolist firms. So here, I examined the three sorts of price discrimination at the beginning of the essay. They are perfect price discrimination, market separation, and the price discrimination strategies for multiproduct firms. With this information, it seems that price discrimination usually works efficiently for firms. Then why and in which circumstances, some firms do not price discriminate? To find out the answer, I then consulted the three conditions for price discrimination. Firms` market power, properly prevented arbitrage, and consumers` different price elasticities of demand are they. Therefore, if these conditions are not satisfied, firms do not employ price discriminating strategy. Also, there are some situations that consumers` psychology affects firms` price discrimination. Especially when the firms deal in luxury goods, they mind going on sale, or offering installment billing. That is because quality-sensitive consumers doubt the quality of their products if they go on sale and they don`t want to be treated the same as price-sensitive customers.

참고 자료

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Carroll, Kathleen and Coates, Dennis. 1999. Teaching Price Discrimination. Southern Economic Journal, Vol. 66.
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Nicholson, Walter and Snyder, Christopher. 2010. Theory and Application of Intermediate. 11th edition. South-Western, Cengage Learning.
Shmanske, Stephen. 1993. A Simulation of Price Discriminating Tolls. Journal of Transport Economics and Policy, Vol. 27.