Price discrimination monopoly is when a company charges different rates to different customers for the same product or service. This is possible due to the company’s monopoly power, which allows it to control the market and maximize profits. The company assesses different consumer categories to develop a price discrimination regime. An example is a designer clothing company that sells products at a high price to wealthy customers and at a discount to less affluent customers. The company must have controls in place to prevent customers from buying in the cheaper market and selling at a profit in the more expensive market.
Price discrimination monopoly is an economic term that is used to refer to the ability of a certain category of company to charge different rates to its customers or consumers for the consumption of its goods or services. This means that the company in question is able to exert some form of influence which it can exploit as a means to arbitrarily mark the price of an asset up or down as it sees fit. This power of the company to fix the price in this way is mainly due to monopoly, which means that the company has a high degree of influence over the final determination of the product or service due to the fact that it has the exclusive right of exclusivity distribution or production of the article. This could be due to government intervention, or it could be the result of something like owning a patent or copyright that allows the company to exclusively manufacture and market the product.
A price discrimination monopoly mainly means that the company will carry out an assessment of different categories of its consumer base with the intention of studying their habits and economic situation. The insights gained from this analysis will allow such a company to develop a monopoly price discrimination regime aimed at ensuring that the company is able to meet the needs of the segmented market, while still managing to maximize its profits. An example of this can be seen in the case of a company that produces designer clothes and accessories. In this type of case, the company may have built their brand around the exclusivity of their product, meaning the products are aimed at a more exclusive clientele who may have been targeted based on their deep pockets. Since the company wants to make as much profit as possible, it could apply a monopoly on price discrimination to the sale of products.
In this case, the clothes can be sold to customers in certain localities at a very high price under the assumption that the people living there are mostly very wealthy. The same clothes may also be sold at a discount to another market where consumers are assumed to be less affluent but still able to pay a reasonable amount for the clothes. The key to the success of a price discrimination monopoly is for the company to ensure that it has concrete controls in place that will make it difficult for some of the consumers who may be aware of the price disparity to buy the clothes in the cheaper market and proceed to sell them at a profit on the market with the highest price.
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