Lectures in Microeconomics-Charles W. Upton Price Discrimination-A Primer MR 1 =MR 2 =MC

Price Discrimination-A Primer What is Price Discrimination? –Selling the same good to different people at a different price.

Price Discrimination-A Primer –My grandfather once told me…

Price Discrimination-A Primer –And it is a good thing…

Price Discrimination-A Primer Selling at Different Prices

Price Discrimination-A Primer Sales at Different Prices

Price Discrimination-A Primer Deadweight Loss DWL = $30

Price Discrimination-A Primer Different Prices π = $150 DWL = $0

Price Discrimination-A Primer The Basic Demand Function D MR MC

Price Discrimination-A Primer The Basic Demand Function D MR MC P* Q*

Price Discrimination-A Primer DWL  CS The Basic Demand Function D MR MC P* Q*

Price Discrimination-A Primer  The Basic Demand Function D MR MC P* Q*

Price Discrimination-A Primer Price Discrimination Basics No Arbitrage –To sell to different people at different prices, you must be able to prevent re-sales. Identifying Customers –Or at least getting them to self-identify.

Price Discrimination-A Primer The Hatfields and McCoys Q H = 35 - p H Q M = 65 – p M

Price Discrimination-A Primer The Hatfields and McCoys Q H = 35 - p H Q M = 65 – p M

Price Discrimination-A Primer The Hatfields and McCoys Q H = 35 - p H Q M = 65 – p M MR 1 =MR 2 =MC

Price Discrimination-A Primer The Hatfields and McCoy's MC DMDM DHDH MR PHPH QMQM QHQH

Price Discrimination-A Primer The Hatfields and McCoy's 5 5 DMDM DHDH MR PMPM PHPH QMQM QHQH Q M = 65 – p M Q H = 35 - p H

Price Discrimination-A Primer The Hatfields and McCoy's 5 5 DMDM DHDH MR PMPM PHPH Q M = 65 – p M Q H = 35 - p H 6030

Price Discrimination-A Primer The Hatfields and McCoy's 5 5 DMDM DHDH MR PMPM PHPH Q M = 65 – p M Q H = 35 - p H 6030

Price Discrimination-A Primer The Hatfields and McCoy's 5 5 DMDM DHDH MR Q M = 65 – p M Q H = 35 - p H 6030

Price Discrimination-A Primer The Hatfields and McCoy's 5 5 DMDM DHDH MR Q M = 65 – p M Q H = 35 - p H

Price Discrimination-A Primer The Hatfields and McCoy's 5 5 DMDM DHDH MR Q M = 65 – p M Q H = 35 - p H

Price Discrimination-A Primer End ©2006 Charles W. Upton