Toll Free:

Log In Live Chat

Second Degree Price Discrimination

Buy custom Second Degree Price Discrimination essay

Second price discrimination is also called non-linear pricing. This discrimination, like other price discrimination, is practiced by firms with monopoly power. Here, the firm sells different quantities of outputs for different prices per unit. The discrimination is not among the customer and hence for those who buy equal quantities of a commodity pay equal price per unit. The monopolist provides the same schedule of prices to all consumers and the consumer decides independently, the quantity to buy and price to pay (Kwoka, 1979).

What to now

A firm has imperfect information about the buyers and their preferences. However, as long as it is a price maker and that there no other firm to take advantage of the firm’s pricing strategies, then it can adopt second degree price discrimination as long as they retain control of prices. There are other things that it must be aware of. 

To start with, the seller must be able to indentify different buyers. In this case, the seller has to know the various price elasticity of demand so as to tell the implication of charging higher or lesss in relation to the quantity purchased. If elasticity and willingness to pay are the same then discrimination should not be adopted (Kwoka, 1979).

Secondly, the seller must be aware of the possibility of arbitrage amongst the consumer. It should be such that, to those that are able to buy in bulk and at a lower price, they are not able to resell the goods to others at higher prices, lest discrimination would be detrimental to the firm. Therefore the monopoly should be able to separate and keep the market segment separate (Kwoka, 1979).

 

Buy custom Second Degree Price Discrimination essay

Related essays

  1. Principles of Finance: Threaded Questions
  2. HSBC and J JPMorgan Chase Bank
  3. Balance of Power Between Management and Employees at Wal-Mart
  4. Multinational Research Paper

You save

  • Free Plagiarism report

    -$15

  • Free Outline

    -$5

  • Free Revision

    -$30

  • Free Title page

    -$5

  • Free Bibliography

    -$15

  • Free Formatting

    -$10

  • Total: $80

Our benefits

  • All Academic levels!
  • Customer Support 24/7
  • Live Chat 24/7
  • Singlespacing/Double spacing Font size 12 pt Times New Roman 300+ words per page
  • Qualified writers with PhD and MA degrees
  • Direct communication with a personal writer
  • Attractive system of discounts
  • Modern and peer-reviewed sources
  • Complete confidentiality
  • Native English speaking writers

Testimonials

Close
 
 

Limited
Time Offer

0
0
days
:
0
0
hours
:
0
0
minutes
:
0
0
seconds
Get 20% OFF u8aryQ
X