Answer the following questions: 1) In what ways can a company price discriminate

Question

Answer the following questions: 1) In what ways can a company price discriminate? What do you think about the statement: Price discrimination cannot take place unless consumers can be isolated into groups and the goods cannot be sold by one group to other groups? Can you find any examples of companies in the geographical locations you live who price discriminate? In what specific ways do they “price discriminate?” 2) Traditional brick and mortar retail stores are losing their customer base while their online competitors are seeing phenomenal increase in the number of customers. Examine the differences and similarities (where possible) in the two modes of retail in terms of the following economic concepts: a) Production and Cost Analysis in the Short Run and Long Run b) Market structure (Perfect Competition, Monopoly & Monopolistic Competition, Oligopoly) c) Pricing Strategies 3) Do you think traditional retail stores can survive the competition? Explain your answer.

Explanation / Answer

First question is answered below.

Firms can price discriminate by segregating consumers into different markets or groups based on their age, income, tastes, preferences, quantity demanded etc.

The given statement is true. In order for price discrimination to be successfully implemented, it is necessary to segregate consumers in different groups like different age groups or different residential areas. This gives the monopolist greater power over different markets and capture higher profits because of inelastic demand faced in these groups.

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