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Price discrimination in case of patented products

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Many firm have patents giving them monopoly power; yet, many do not price discriminate across state boundaries. Almost surely there are differences in price elasticity of demand across states. Why don't most manufacturers take advantage of this opportunity? Carefully Explain.

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Solution Summary

Solution discusses the problems in implementing price discriminating policies.

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It is true that there are differences in price elasticity of demand across states. Most of the times it is not possible to go for price discrimination because of the following reasons

1. Measuring price elasticity of demand across segments requires lot of research and accuracy which is sometimes ...

Solution provided by:
Lokesh Jain, MSc
Education
  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
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