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Posts: 119
2 months ago

Question 1.

What is the difference between price discrimination and other forms of discrimination?

Question 2.

Why is it necessary for a firm that practices price discrimination be a price maker rather than a price taker?
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Microeconomics
Edition: 7th
Authors:
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2 months ago
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Answer 1

Discrimination based on race or gender and other arbitrary characteristics is illegal under civil rights laws. Price discrimination generally is legal, although it could be illegal under the Robinson-Patman Act if its effect is to reduce competition in an industry. Price discrimination involves charging people different prices based on differences in their willingness to pay, when these differences are not due to differences in costs.

Answer 2

A price taker has no market power and therefore cannot influence market price. A price maker, on the other hand, is able to influence market price. As long as a seller cannot influence market price, it will not be able to engage in price discrimination.
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2 months ago
Smart ... Thanks!
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