top | item 14519867

(no title)

zhoutong | 8 years ago

In fact, in a monopolistic market, perfect price discrimination (every consumer pays exactly their individual marginal utility) results in allocative efficiency.

The consumer surplus is zero, but the producer surplus is the maximum possible value.

In other words, the monopolistic supplier would otherwise charge a higher price for everyone if it is unable to price discriminate. If price discrimination is successful, more consumers can afford the product.

discuss

order

No comments yet.