Price discriminationPrice discrimination consists of charging consumers different prices for identical and similar products, which are not related to production costs. An important point to mention: Products that vary in price due to cost variation and justification are not considered price discrimination. For example, charging different prices for the same product for different geographic locations does not result in price discrimination, due to the difference in transportation or delivery costs being considered geographic cost justification. This report demonstrates price discrimination in a monopolistic market, the three conditions that should be met for price discrimination to occur, and the degrees and types of price discrimination. Furthermore, there are three substantive conditions that should be met for price discrimination to occur. discrimination takes place. First, market power; For a firm to price discriminate, the firm should have market power. To illustrate, market power exists when there are few firms that can control the price of its products. On the other hand, price discrimination in a perfectly competitive market cannot be seen. Since a perfectly competitive firm is a price taker, it does not have the power to control prices for different products and must accept the price decided by the market. Second, separate the market between consumers and their willingness to pay for a particular product. In other words, the firm must know how reservation prices or elasticities of demand vary among different consumers. Third, a company must ensure that it prevents resale. Price discrimination requires that buyers of a particular good be unable to resell that product to other buyers who pay well...half a paper...lus. In some cases there will be no consumer surplus. The pros of price discrimination outweigh the cons. In conclusion, the paper highlights the necessary conditions and different types of price discrimination, as well as the pros and cons of price discrimination. The market should have market power, there must be differences in the price elasticity of demand, the firm must prevent resale by consumers. Perfect price discrimination is to sell the product at the maximum reserve price, with the producer extracting the entire surplus without any deadweight loss. Second-degree price discrimination occurs when companies charge less to purchase blocks and packages; as a result, consumer and producer surplus increases as consumers purchase more units. Third-degree (multimarket) price discrimination applies different prices for different segments of the market.