Distinguish b/w a price discriminating&single price monopoly & explain what prevents all monopolies from price

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  1. Price discrim: will try have different prices in diff market segments  for the same product. this allows them to increase their producer surplus (some consumer surplus is transfered to the producer)

    Single price: only have one price for all market segments.

    Not all monops can be price discriminators because it depends on their product and industry. In the market, u have to be able to keep the different segments separated--> if not resale occurs.

    Some industries wont be able to be segmented.

  2. Price Discriminating Monopolist sets prices according to different targetted consumers, to exploit more consumer surplus out of the consumers.

    Single Price Monopolist sets prices at ONE price. Most importantly, typically prices are set by setting MC = MR to maximise profit. Single price monopolist is less efficient, as quantity supplied is purposely restricted as to raise the price. There is a resultant deadweigh loss which refers to a loss of welfare to the society. i.e. wastages.

    Comparing the two, a price discriminating monopolist is more efficient compared to a single price monopolist. Reason being that for a price discriminator, at least some part if not all of the initial deadweigh inefficiency loss is exploited, which result in lower wastages and loss of welfare to the society.

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