Price discrimination and its types

Price discrimination is usually called monopoly price discrimination. It means a situation in which the monopoly firm charges different price from the customer for the same product. In such a situation the buyer has no choice but to buy it because of having no close substitutes. It is of three types:

1.) First degree price discrimination: in such a case the monopolist charge different price as per the paying capacity of the consumer. For example the doctors charge fewer fees from poor.

2.) Second degree price discrimination: in such a case the monopolist charge different price for different units of the same product. For example the government charge different price for different units of electricity.

3.) Third degree price discrimination: in such a case there is a two type of market like in railways there is the option of first class, second class etc.

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