【正文】
BMW in USA is the same to in German? ? General equilibrium theorist may point out with some excuse, goods delivered in different time, different location and different state or different quality is different goods, so scope of pure price discrimination is very limited. Conditions of price discrimination firms must has market power. We often confine it in monopoly or oligopoly market, only when firms can price higher than marginal cost, can they charge different price on different consumers. Locay and Rodriguez,1992: petitive firms is possible to practice price discrimination, if consumers purchase in group unit. the ability of effective market segmentation. ensure of no arbitrage. Market segmentation Can we find a right way to conduct market segmentation( the result must be related to price elasticity and WTP(willing to pay) ? status ? gender ? age ? Location ? time ? use ? Purchasing amount Kinds of arbitrages Possibility of price discrimination is related with possibility of arbitrage. ? One kind of arbitrage is related with transferability of goods. ? If transaction cost is low, price discrimination will encounter arbitrage, namely lowprice consumers will buy for reselling to highprice consumers. ? Transaction cost provides one clue to feasibility of price discrimination. ? Absolute arbitrage or no arbitrage is only two extreme case. Generally, some limited arbitrage will occurs, it depends on relative cost and ine. ? The other kind of arbitrage is related with transferability of different consume packages or bundles provided to consumers. ? That not means physical transfer of goods among consumers. That means firms try to make every buyer really select consume package designed for him, not for others. ? Incentive patibility and selfselection. Influence of arbitrage ? Influence of two kinds of arbitrage is different. ? Transferability of goods is inclined to prevent discrimination. ? Transferability of demand may cause firms increase discrimination. Three kinds of price discrimination ? Perfect price discrimination—— suppliers get all consumer surplus in condition of holding perfect information of willing payment. ? Seconddegree price discrimination——suppliers extract consumer surplus inpletely using selfselection when information of individual preference is inplete. ? Thirddegree price discrimination—— Market segmentation using direct information about demand such as age, profession and location etc. and set different price for each group. Perfect price discrimination (1) simplest case: single consumer (or some identical consumers) has one unit of demand. Monopoly make price equal to reserve price, getting all consumer surplus. ? A classical example: a doctor is a little village similar with everybody in there and their economic information. He estimates how much everyone is willing to pay for and then charge for that amount. ? Another case: airline pany pay for each aircraft in different price. (2) Complex case ? assumption: n consumers hold the same demand curve, and monopoly know about it. ? q = D(p)/n, so D(p)=nq ? T gross of consumers’ payment ? Two pricing projects: linear pricing and two part tariff ? Linear pricing: T=pq ? Two part tariff: T=A+pq Profit maximiz