Advantages   (Merits) of Price discrimination

Advantages   (Merits) of Price discrimination

  1. Price discrimination increases   the total revenue   of the monopolist.    This is because,   output sold increases   due to the act of charging   different prices to different consumers   of similar units of the same commodity.             .
  2. It helps to reduce income inequalities.      This  is because  the  rich  consumers   are  charged   higher prices  and the low income  earners  are charged  low prices.
  3. It enables the low income   earners   to get essential   commodities    at fair prices.   For example medical services, transport and housing etc.
  4. Price discrimination helps producers    or countries to dispose of the surplus   output through the process of dumping.  Dumping   is important   to the producer  because  it encourages   exploitation   of resources  within  the home  country  by widening  the external  market  for goods  and  services.
  5. The profits earned by a monopolist   through price discrimination    can be used to expand   on  the business   and to improve  on the welfare  of the workers.

6.   Price discrimination    increases   quantity   sold and consumed example for electricity,   the first units are charged a high price as compared   to the extra units.   Therefore   the more units you use, the less charge you incur for the extra units.

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