Concept of

discriminating
monopoly
By:- Harmanjot
MEANING &
DEFINITION
• It is a selling strategy that charges
customers different prices for the same
product or service based on what the seller
thinks they can get the customer to agree to.
• In the words of JS Bains,“Price
discrimination refers strictly to the practice
by a seller of charging different prices from
different buyers for the same good.”
TYPES
Price discrimination is of mainly three
types:-

• Personal price discrimination

• Geographical price discrimination
• Price discrimination according to use
Personal price
discrimination
Personal price discrimination refers to
the charging of different prices from
different customers for the same
product.
For example, a doctor charges different
fees for the same operation from rich
and poor patients.
Geographical price
discrimination

• Under geographical price

discrimination, the
monopolist charges different
prices in different markets
for the same product. The
practice of adjusting an
item’s sale price based on the
location of the buyer.
According
to use
• When the monopolist
charges different prices for
the different uses of the
same commodity is called
the price discrimination
according to use.
DegreeS Of Price
Discrimination
• First degree:-
• Second degree:-
• Third degree:-
FIRST
DEGREE
• In case of first degree
price discrimination, a
seller charges a price
equal to what the
consumer is willing to
pay. It means the seller
leaves no consumer’s
SECOND DEGREE
• In the price discrimination of
second degree buyers are divided
into different groups and from
different groups a different price
is charged which is the lowest
demand price of that group.
THIRD
DEGREE
• Price discrimination of
third degree is said to exist
when the seller divides his
buyers into two or more
than two sub markets and
from each group a
different price is charged.
Conditions Of Price
• The seller must have some control
over the supply of his product. Such
monopoly power is necessary to
discriminate the price.
• The seller should be able to divide the
market into at least two sub-markets
Other conditions
• The price-elasticity of the product must be
different in different markets. Therefore, the
monopolist can set a high price for those
buyers whose price-elasticity of demand for
the product is less than 1.
• Buyers from the low-priced market should not
be able to sell the product to buyers from the
high-priced market.
 POSITIVE EFFECTS

Fuller
Beneficia Public
utilizatio
l to the utility
n of
poor services
resources
NEGATIVE
EFFECTS
• No proper use of factors of
production
• Less production
CONCLUSION
• In conclusion, price discrimination is a
pricing strategy used by businesses to
charge different prices to different groups
of customers for the same product or
service.
• The effectiveness and ethics of price
discrimination depend on the specific
context and industry in which it is applied.