Price discrimination can be defined as the differences in the ratio of price to marginal cost across buyers or unit of a good. One form of price discrimination is the practice of a firm charging multiple prices for the same good where the difference in price is not attributable to a corresponding difference in cost. Another form of price discrimination is the practice of a firm charging the same price for all units of the same good when there are cost variations in supply.
Not all firms can price discriminate. For a firm to practice price discrimination three conditions must apply. First…
