Please use this identifier to cite or link to this item: http://hdl.handle.net/1946/19809
This thesis‘ aim is to clarify common misunderstandings in relation to price discrimination. It will present the microeconomic literature on price discrimination as well as new research and analyze the effects of price discrimination on welfare using the fundamental models of microeconomics as benchmarks.
Price discrimination is when two or more similar goods are sold at prices that are in different ratios to marginal costs. The practice can help firms raise their profits by attracting new customers, increasing sales and by charging a higher price to those that value its product highest.
The word discrimination however, helps fuel a general distaste for the practice among the public. The perceived unfairness leads to immense pressure for legislative actions. The measures taken in order to relive such pressure are often misguided and can lead to inferior outcomes than those they were aimed to cure.
New research has changed the way economists and regulators have to approach price discrimination by challenging one of the main criteria for a firm’s ability to adopt discriminatory prices. The results from said research, along with an analysis of the welfare effects of price discrimination will be used here to make a case for the positives of the practice.
|Fighting Misconception, A Survey of Price Discrimination _ Guðmundur Óli Magnússon _ BA Thesis.pdf||896.48 kB||Open||Heildartexti||View/Open|