Week 4: Price Discrimination on Internet
In the past few days, I try compared the deferent directions of my project. It seems too tricky for me to do the research of Internet rip-off in different countries . Maybe I can tern my attention to the price discrimination on Internet. I try to adjust my opinion and arrive at a simple structure.
What is price discrimination
- Price discrimination is essentially a kind of price difference, which usually refers to the implementation of different selling prices or charging standards among the recipients when the providers of goods or services provide the same grade and quality of goods or services to different recipients. If a business operator, without justifiable reasons, offers different prices for the same goods or services to several buyers of the same conditions, it constitutes price discrimination.
Three levels of price discrimination
Price discrimination can be divided into 3 levels according to the degree of price difference:
- Level of price discrimination, also called price discrimination completely, is each unit of product has different price, assuming that monopoly know every consumer to pay the largest amount of any number of product, and to determine its price, the price of the identified is exactly equal to the demand for product price, so all the consumer surplus for each customer. This is an extreme situation and rarely happens in reality.
- The monopolist knows the demand curve of consumers, divides the demand curve into different segments, and determines different prices according to different purchase quantities, so that the monopolist obtains part of the consumption surplus of buyers rather than all of them. The differential price in public utilities is the typical secondary price discrimination.
- Monopolists impose different prices on different consumers in different markets and obtain excess profits in markets with high prices.
Monopoly and price discrimination
- Once the seller of a product has formed a monopoly, it is very easy to form price discrimination.Discrimination is differential treatment. Take price discrimination as an example, that is, the same product sold to different people, charged different prices, the formation of price discrimination. However, by extension, there are many forms of discrimination that give different treatment to different people in the same area of life.
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