What three conditions must hold for a firm to successfully price discriminate?
What will be an ideal response?
Successful price discrimination has three requirements:
1. A firm must possess market power.
2. Some consumers must have a greater willingness to pay for the product than others; the firm must know the prices consumers are willing to pay.
3. The firm must be able to segment the market so consumers who buy at a low price cannot resell at a higher price.
Economics