OMTEX CLASSES: PRICE DISCRIMINATION IS POSSIBLE UNDER MONOPOLY

PRICE DISCRIMINATION IS POSSIBLE UNDER MONOPOLY

2. Price discrimination is possbile under monopoly.

Ans. This implies charging different prices for the same product to different buyers. In monopoly the seller succeeds in increasing his profit by adopting the technique of price discrimination.

(i) In a monopoly market, there is a single seller or single producer. Therefore, the monopolist has no rivals and he faces no competition. In a monopoly market, there are large number number of buyers and they do not have any other substitute for the product produced by the monopolist.

(ii) Under monopoly, the entry of other firms is strictly restricted by natural, economi, technological or legal barriers. Therefore, in monopoly, the monopolist can charge any price for his peoduct. He can also charge different prices to different consumers for the same product. Therefore, price discrimination is possible uner monopoly.