Competition and markets

Price Discrimination: A Case Study of Imperfect Competition

Market power is defined as the ability to raise the price of a good or a service without losing all demand. Firms that have market power can be characterized as imperfectly competitive, because they do not take the market price as given. Monopolies, oligopolies, and monopolistically competitive firms are all classifies as firms with market power because they have some ability to control the price. These types of firms can also practice price discrimination. Price discrimination is the practice of charging different prices for the same good. This Case assignment requires you to explore the practice of price discrimination. You will be asked to do some of your own research and answer the corresponding questions in a 3-4 page paper.

Read the following information on price discrimination

“Different Types of Price Discrimination” Retrieved May 17, 2010 from: http://www.economicshelp.org/microessays/pd/price-discrimination.html

What are the advantages of price discrimination to firms?
How do the firms decide how much to charge? (be sure to use economic concepts from the previous modules)
Now, read the following article:
Landsburg, Steven (1998) “Taken to the Cleaners?” Slate.com. Retrieved May 17, 2010 from: http://www.slate.com/id/2050/

What type of price discrimination is this article referring to (first, second, or third)? Why?
Use the Cyberlibrary or internet search engines to pick your own example of price discrimination. Please be sure to cite your reference. How is this price discrimination? What type?
Case Assignment Expectations:

Use concepts from the modular background readings as well as any good quality resources you can find from the cyberlibrary or other internet search engines. Please be sure to cite all sources within the text and a reference list at the end of the paper.