Question

Q4:

In general, the first degree price discrimination is more profitable than the third degree price discrimination, explain why? Given this, why doesn’t all monopolist use profit price discrimination?

Answer 1

It can actually be mentioned that first degree price discrimination is more.profitable because of the fact that the pricing is set in such a way that each unit is charged different based on the customer willingness to pay discrimination where it allows the producer to capture all the consumer surplus where third degree price discrimination, different price is set for different groups which isn't that profitable as the first one. The first degree price discrimination is not possible because of the fact that it is impossible to charge different customers with different price and apart from that the firms will not get to know the reservation price of each customer where they wouldn't recieve honest answers upon enquiring and this makes it impossible for a monopolist to practice.