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Price Discrimination

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What conditions are needed before price discrimination is both possible and profitable? Why does price discrimination result in higher profits?

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What conditions are needed before price discrimination is both possible and profitable? Why does price discrimination result in higher profits?

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Price discrimination exists when sales of identical goods or services are transacted at different prices from the same provider. Market frictions in oligopolies such as the airlines, and even in fully competitive retail or industrial markets allow for a limited degree of differential pricing to different consumers. Price discrimination also occurs when ...

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