What conditions need to be satisfied for price discrimination to be successful?

Answer 1

1) You need to have some degree of monopoly power - firms in perfect competition are price takers and therefore cannot set a price

2) You must be able to identify different types of consumers

3) There must be no arbitrage present - if people who recieve the lower prices are selling the product to people who recieve the higher prices then the affect of your price descrimination is mitigated

Answer 2

Only one condition:
that the company feels that (and the govt permits that) it may be better off in terms of net profit after all costs are deducted from all revenues by selling the same item at different prices to:

people of different ages (= very common & should perhaps be even more common to benefit the very young & old) OR
people of different gender OR
people who have a said membership or benefit claim card OR
as the time until the flight changes
OR first time clients

Answer 3

Separate brands, including an an established premium brand with some degree of monopoly pricing power (this does not mean a full monopoly, just the ability to sucker some people into paying more for brand A than for an equivalent product brand B).

Answer 4

Usually price discrimination exists when the same good or serive is offered at diff. prices for diff. consumers. Normally a monoploy exists when this is happening. You make people who can afford to pay more pay the higher cost and those can't afford it get a lower price. This is to max. profits and sales at the same time. The problem lies in that when the places getting this for cheaper start selling to the consumers who have to pay more for the same goods. One good example is buying prescriptions from Canada.

Answer 5

There's a need for separate identified markets, advertising to suit and buying methods.

Differential pricing is often done by:
using different product versions
different times of the day
geographical differentiation
or market segments.

It all depends on what is being sold.

Answer 6

well, for starters, you have to have a certain degree of market power. and when u excercise PD, u have devide your customers in to different markets, for it to be successful the diefferent markets must be identified on the basis of different elasticity of demand. Its important to note that there must be no arbitrage (i.e. no resale of the goods). And finally the price discrimination must be small enough that cosumers are ignorant of (or not effected by) its existance.

Answer 7

Need

Answer 8

Will every one leave Katy and Peter alone, please