The conditions necessary for price discrimination
Price discrimination means charging different customers different prices for the same product. Three conditions must exist before a firm can do this successfully.
Real World
Amazon charges Prime members and non-members different prices for the same delivery speed, exploiting its market power and its ability to identify and separate customer groups through account data.
Exam Focus
Memorise the three conditions as a checklist — exam questions often ask you to 'explain' each one separately for distinct marks.
Price Elasticity of Demand
PED = % change in quantity demanded ÷ % change in price
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