PRICE DISCRIMINATION

Price Discrimination:

Price discrimination means practices of charging different prices for different units of the same commodity.It occurs when a producer sells a  specific commodity or service to different buyers at two or more different prices for reasons not associated with differences in cost.Price discrimination is a method of pricing adopted by the monopolist in order to earn abnormal profits.

Examples :

(1) The family doctor in your neighbourhood charges a higher fees from a rich patient compared to the fees charged from a poor patient even though both are suffering from viral fever.

(2) A higher price for vegetables may be charged in posh localities livs by the rich than in other localities.

The above cases are examples of price discrimination.