Economics Oligopoly Questions
The price discrimination model in oligopoly refers to a pricing strategy where a firm charges different prices for the same product or service to different groups of customers. This strategy is based on the firm's ability to segment the market and identify different price elasticities of demand among various customer groups. By charging higher prices to customers with a relatively inelastic demand and lower prices to customers with a relatively elastic demand, the firm aims to maximize its profits. Price discrimination in oligopoly can be achieved through various methods such as product differentiation, bundling, or offering discounts to specific customer segments.