Price discrimination monopoly is when a company charges different rates to customers for the same product or service due to their economic situation. This is possible due to the company’s monopoly power, which allows them to set prices arbitrarily. The company assesses its customer base and applies a price discrimination regime to maximize profit. An example is a designer clothing company that sells clothes at a high price in wealthy areas and at a discount in less affluent areas. The success of this strategy depends on preventing customers from buying in the cheaper market and selling at a profit in the higher-priced market.
Price discrimination monopoly is an economic term used to refer to the ability of a certain category of business to charge different rates to its customers or consumers for the consumption of its goods or services. That is, the company in question is capable of exercising some form of influence that it can leverage as a means of arbitrarily setting the price of a good 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 exercises 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 distribution or production of item. 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 produce and market the product.
A price discrimination monopoly mainly means that the company will conduct an assessment of the different categories of its customer base with the intention of studying their habits and economic situation. The knowledge gained from this analysis will allow this company to develop a price discrimination monopoly regime that aims to ensure that the company is able to meet the needs of the segmented market, while still managing to maximize its profit. An example of this can be seen in the case of a company that manufactures designer clothing and accessories. In this type of case, the company may have built its brand on the exclusivity of its product, meaning that the products are targeted at a more exclusive clientele that may have been targeted based on their deep pockets. Since the company wants to make as much profit as possible, it may apply a price discrimination monopoly to the sale of products.
In that case, clothes can be sold to customers in certain locations at a very high price, based on the assumption that the people who live there are mostly very wealthy. The same clothes may also be sold at a discount to another market where consumers are presumed 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 concrete checks are in place that will make it difficult for some consumers who may be aware of the price disparity to purchase clothes in the cheaper market. and proceed to sell at a profit in the market with the highest price.
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