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Consumer surplus is higher under a single-price monopoly than it is under a perfectly price-discriminating monopoly.
Consumer Surplus
The contrast in the overall payment consumers have the willingness and fiscal capability to make for a good or service, compared to the payment they actually make.
Perfectly Price-Discriminating Monopoly
A theoretical market structure in which a monopolist charges each consumer the maximum they are willing to pay, capturing all consumer surplus.
- Examine the effects of price discrimination on the profits of a monopolist and the surplus of consumers.
- Clarify the notion of perfect price discrimination and examine its influence on economic efficiency and the surplus of consumers.
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Learning Objectives
- Examine the effects of price discrimination on the profits of a monopolist and the surplus of consumers.
- Clarify the notion of perfect price discrimination and examine its influence on economic efficiency and the surplus of consumers.
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