Conditions of Price Discrimination

Conditions of Price Discrimination:

Price discrimination is only possible when the conditions below are fulfilled:

1. The demand should not be transferable from the high priced market to the low priced market. When rich people do not purchase the high-priced deluxe edition of the book, however wait for low-priced popular edition to come out, and then personal discrimination will be unsuccessful.

2. The monopolist must keep the two markets or various markets separate, therefore the commodity will not be moving from one market to another. When it is possible to purchase the product in the cheaper market of the monopolist and trade it in the dearer market, there can never be two costs for the commodity. When the industrial buyer of cheap electricity employs it for domestic consumption, then trade discrimination will be unsuccessful.

The above two situation are necessary to adopt price discrimination.

 

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