Disadvantages of price discrimination...
hi
- Some consumers end up losing out on consumer surplus because it is transferred to the producer. They may pay the maximum price they are willing to even if other customers are receiving the same thing at a far lower price.
- Can argue welfare is therefore minimised for SOME.
- Firms can exploit producer sovereignty; consumers who have perfectly or relatively inelastic D may suffer by paying a higher price than they wish because producers know they can charge high prices but be assured D.
- Monopoly power can be abused if most consumers are paying higher prices for the same thing than others.
- Generally ends up being so that consumers pay higher prices than in the absence of price discrimination.