why is it rational for a monopolist to charge different prices in two segmented markets?

Answer 1

You make bigger profits. The best situation (for suppliers) would be to charge each and every individual exactly what each one is willing to pay up to the point where they aren't willing to sell at the lower end. But then they maximize the profits by earning more off some people and still selling the maximum possible of goods.

Airlines use to get away with this. They had business travel and pleasure travel. The business travel was steady clients for them and willing to pay. They wanted more pleasure travelers as they had the space on the plane. So they offered lower rates to book 2 weeks ahead and if you stayed a Saturday. Business travel didn't plan that far ahead, and tended to fly home as soon as you were done. If you had to stay an extra day or more to stay a Saturday you may have to pay your employee more for doing nothing. While pleasure travel almost always included weekends. THEN, discount airlines came in and did away with all the regulations and rules to get lower airfares.

Answer 2

Because he can maximize profit that way.

Think about the demand curve. Normally P and Q are set at an equilibrium point, and, in a perfectly competitive market, there is a single price for the good. The consumer's surplus is the area under the demand curve and above a line drawn horizontally across the graph at price=P.

But if you can sell at different prices to different consumers, you get more revenue, and more profit out of the market.

Airlines practice this by selling seats on their planes at different prices to different segments of the market. (They're an oligopoly, but the same principle applies.)

Answer 3

b/c different markets have different demand curves.