- Firm charges different prices to different consumers
- Changing prices for SIMILAR goods is not price discrimination
- Product differentiation is not the same as Price disc. Product diff. gives producer more control over price die to consumers' perception that there is a difference in the product
Necessary conditions -
- Must be difference in PED from each group of consumers. Firm can charge more to group with higher price inelesticity of demand. MR=MC profit max in both groups.
- Producer must be able to prevent market seepage: consumers can't switch groups easily.
- Perfect P.D: Charging whatever the market will bear. Separates market into individuals and what the are prepared…