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Economic Definition of price discrimination. Defined.

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Term price discrimination Definition: Charging different prices to different buyers for the same good. This is an age old practice for suppliers who have achieved some degree of market control, especially those with a monopoly. The reason for price discrimination, of course, is higher profit. To be a successful price discriminator you must be able to do three things--(1) have market control and be a price maker, (2) identify two or more groups that are willing to pay different prices, and (3) keep the buyers in one group from reselling the good to another group. In this way, you will be able to charge each group what they, and they alone, are willing to pay.

 

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