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    Vasudevan PPT Comp

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    Vasudevan PPT Comp

    Uploaded by

    vasudevann277
    10 views11 pages

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    Vasudevan Ppt Comp

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    10 views11 pages

    Vasudevan PPT Comp

    Uploaded by

    vasudevann277

    Copyright:

    © All Rights Reserved
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    PRICE

    DISCRIMINATION
    PRESENTED BY :

    VASUDEVAN T

    2233156

    I-M.COM (GENERAL)

    KMPGISR
    PRICE DISCRIMINATION

    • Price discrimination refers to the practice of a seller of selling the same product at
    different prices to different buyers. A seller makes price discrimination between
    different buyers when it both possible and profitable for him to do so.
    • If the manufacturer of a refrigerator of a given variety selles it at Rs. 10000 to one
    buyer and at Rs.10500 to another buyer (all conditions of sale and delivery being the
    same in two cases), he is practicing price discrimination.
    DEGREES OF PRICE DISCRIMINATION

    • Prof. A. C. Pigou has distinguished between the following three types of price
    discrimination on another ground
    • Price Discrimination of First Degree
    • Price Discrimination of Second Degree
    • Price Discrimination of Third Degree
    Price Discrimination of 1st Degree
    • First-degree price discrimination or perfect price discrimination refers to a pricing
    strategy whereby the companies charge the utmost price that a buyer is willing and
    capable of paying for every unit of a product or service. This approach aims to maximize
    the seller’s profit.
    Price Discrimination of 2nd Degree
    • Second-degree price discrimination occurs when a company charges a different price for
    different quantities consumed, such as quantity discounts on bulk purchase.
    • For example:
    A phone plan that charges a higher rate after a determined amount of
    minutes are used. Reward cards that provide frequent shoppers with a discount on future
    products
    Price Discrimination of 3rd Degree

    • Third-degree price discrimination - Dividing the market into segments and charging a
    different price to each segment.
    • For example:
    A theatre may divide moviegoers into seniors, adults, and children,
    Each paying a different price when seeing the same movie. This
    discrimination is the most common.
    PRICE DISCRIMINATING MONOPOLIST OF THE FIRST DEGREE EXTRACTS ALL
    THE CONSUMER SURPLUS FROM THE BUYER

    12

    10

    AR = MR
    6
    P

    0
    D
    0 2 4 6 8 10 12 14 16

    Q
    SECOND DEGREE PRICE DISCRIMINATION

    D
    Consumer surplus

    50 P

    p
    price 40

    30

    x
    10 20 30
    Quantity
    When rice discrimination is possible?

    • Income of the Customer


    • The Nature of the Commodity
    • Long Distance or Tariff Barriers
    • Legal Sanctions
    • Preferences of Buyer
    • Ignorance and Laziness of Buyer
    • Price Discrimination
    When is price discrimination profitable?

    Price Discrimination is possible only when the percentage change in surplus


    associated with a product upgrade is increasing the consumer willingness to pay,
    i.e. total consumer’s willingness to pay less the firms costs.
    THANK YOU
    Presented by:

    Vasudevan T

    2233156

    I-M.com (general)

    KMPGISR

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