1. Lectures in Microeconomics-Charles W. Upton Price Discrimination-A Primer MR 1 =MR 2 =MC

2. Price Discrimination-A Primer What is Price Discrimination? –Selling the same good to different people at a different price.

3. Price Discrimination-A Primer –My grandfather once told me…

4. Price Discrimination-A Primer –And it is a good thing…

5. Price Discrimination-A Primer Selling at Different Prices

6. Price Discrimination-A Primer Sales at Different Prices

7. Price Discrimination-A Primer Deadweight Loss DWL = $30

8. Price Discrimination-A Primer Different Prices π = $150 DWL = $0

9. Price Discrimination-A Primer The Basic Demand Function D MR MC

10. Price Discrimination-A Primer The Basic Demand Function D MR MC P* Q*

11. Price Discrimination-A Primer DWL  CS The Basic Demand Function D MR MC P* Q*

12. Price Discrimination-A Primer  The Basic Demand Function D MR MC P* Q*

13. Price Discrimination-A Primer Price Discrimination Basics No Arbitrage –To sell to different people at different prices, you must be able to prevent re-sales. Identifying Customers –Or at least getting them to self-identify.

14. Price Discrimination-A Primer The Hatfields and McCoys Q H = 35 - p H Q M = 65 – p M

15. Price Discrimination-A Primer The Hatfields and McCoys Q H = 35 - p H Q M = 65 – p M

16. Price Discrimination-A Primer The Hatfields and McCoys Q H = 35 - p H Q M = 65 – p M MR 1 =MR 2 =MC

17. Price Discrimination-A Primer The Hatfields and McCoy's MC DMDM DHDH MR PHPH QMQM QHQH

18. Price Discrimination-A Primer The Hatfields and McCoy's 5 5 DMDM DHDH MR PMPM PHPH QMQM QHQH Q M = 65 – p M Q H = 35 - p H

19. Price Discrimination-A Primer The Hatfields and McCoy's 5 5 DMDM DHDH MR PMPM PHPH 30 15 Q M = 65 – p M Q H = 35 - p H 6030

20. Price Discrimination-A Primer The Hatfields and McCoy's 5 5 DMDM DHDH MR PMPM PHPH 30 15 Q M = 65 – p M Q H = 35 - p H 6030

21. Price Discrimination-A Primer The Hatfields and McCoy's 5 5 DMDM DHDH MR 35 20 30 15 Q M = 65 – p M Q H = 35 - p H 6030

22. Price Discrimination-A Primer The Hatfields and McCoy's 5 5 DMDM DHDH MR 35 20 30 15 Q M = 65 – p M Q H = 35 - p H 6030 27.50

23. Price Discrimination-A Primer The Hatfields and McCoy's 5 5 DMDM DHDH MR 35 20 30 15 Q M = 65 – p M Q H = 35 - p H 6030 27.50

24. Price Discrimination-A Primer End ©2006 Charles W. Upton