Condition for price discrimination
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Necessary conditions for successfuldiscrimination. Price discriminationcan only occur if certain conditions are met. The firm must be able to identify different market segments, such as domestic users and industrial users. Different segments must have different price elasticities (PEDs).
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Answer:Conditions necessary for price discrimination
The firm must operate in imperfect competition; it must be a price maker with a downwardly sloping demand curve. Separate markets. The firm must be able to separate markets and prevent resale.There are three types of price discrimination: first-degree or perfect price discrimination, second-degree, and third-degree.Price discrimination is possible under the following conditions: The seller must have some control over the supply of his product. Such monopoly power is necessary to discriminate the price. The seller should be able to divide the market into at least two sub-markets (or more).
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