Why price decrination is observed only under Monopoly

Price discrimination is observed under monopoly because a monopoly has the sole control over the supply of a particular good or service in the market. This gives the monopolist the power to set the price and quantity of the product in order to maximize their profits.

Price discrimination occurs when the monopolist charges different prices for the same product to different groups of consumers. This allows the monopolist to extract more consumer surplus and increase their profits.

There are three main types of price discrimination: first-degree, second-degree, and third-degree.

First-degree price discrimination, also known as perfect price discrimination, happens when the monopolist charges each individual consumer the maximum price they are willing to pay. This requires the monopolist to have perfect information about each consumer's willingness to pay.

Second-degree price discrimination occurs when the monopolist charges different prices based on the quantity of the product purchased. For example, bulk discounts or volume pricing.

Third-degree price discrimination happens when the monopolist charges different prices to different groups of consumers based on certain characteristics, such as age, location, or income level. This is the most common form of price discrimination and is often seen in industries like air travel or movie theaters.

Under monopoly, price discrimination can occur because the monopolist faces no competition and can effectively segment the market. This allows them to identify and charge different prices to different groups of consumers based on their willingness to pay.

To observe price discrimination under monopoly, one can analyze the pricing strategy of the monopolist and compare the prices charged to different groups of consumers. Market research and analysis can help identify any patterns of price discrimination by looking for variations in price based on different consumer characteristics or purchasing behaviors.

Overall, price discrimination is a strategy employed by monopolies to increase their profits by charging different prices to different groups of consumers.