Degrees of Price Discrimination
According to Prof. A. C. Pigou, there are three degrees of discrimination as under: I Price discrimination of the first degree in which the monopolist charges a different price for each unit of the commodity sold. He charges the mail that cadi buyer IS able and willing to pay, leaving him to consumer ‘s surplus. Obviously.this involves maximum exploitation of the buyers. This is known as perfect price discrimination (ii) Instead of setting price for each buyer as in the first degree discrimination. in the second degree, the buyers are divided into groups and from each group a different price is charged. which is the lowest demand price for that group. Thus. all units with a demand price greater than, say X, are sold at X price, all units with demand price greater than Y but less than X are sold at Y. and so on. Such a price discrimination is possible. The demand of each individual buyer is perfectly inelastic. (iii) In the third degree discrimination. the monopolist splits the entire market into a few sub-markets and charges a different price in each submarket.
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