Sam Rodrigues’ Tryst with Price Discrimination (A): Degrees of Price Discrimination
These two caselets (Sam Rodrigues’ Tryst with Price Discrimination (A): Degrees of Price Discrimination and Sam Rodrigues’ Tryst with Price Discrimination (B): Single Monopoly vs Price Discrimination) enable a discussion and an understanding on the concept of price discrimination. The discussion is enabled with reference to Sam Rodrigues’ (Sam) – the protagonist of the caselet – experiences with price discrimination. Sam encounters several episodes of price discrimination when he visits Varun Hospitals for a general health checkup and to Mary Diagnostic Center (MDC) to take the recommended diagnostic tests. Through Sam’s experiences, the caselets help understand not just the core concept of price discrimination but also allied concepts such as the types and degrees of price discrimination and comparison between a single monopoly price and price discrimination. It also throws open some relevant economic questions – what are the advantages and disadvantages of price discrimination? What are the conditions under which price discrimination will be possible and profitable? Why is price discrimination more desirable for a monopolist than charging a single monopoly price?
Prerequisite Conceptual Understanding
• Paul A. Samuelson, et al., “Competition among the Few”, Economics, 19th Edition, McGraw Hill Education (India) Private Limited, 2010 – To understand the concept of price discrimination
Case Positioning and Setting
These caselets can be suitably used in:
- • Managerial Economics course to teach the concept of price discrimination in a monopoly
I. What do you understand by price discrimination? What are the advantages and disadvantages of price discrimination?
II. What are the types and the three degrees of price discrimination? Illustrate the three degrees of price discrimination with the help of caselet facts. Who would benefit under each of the three degrees of price discrimination?
Preamble to this Caselet Analysis
The purpose of these two caselets is to introduce the students/participants to the concept of price discrimination (Caselet A) and to distinguish between a single monopoly and price discrimination (Caselet B). The advantages, disadvantages, types and degrees of price discrimination as well as the necessary conditions for price discrimination were discussed in the classroom taking examples from Sam Rodrigues’ story. Further, the comparison between a single monopoly price and price discrimination was also discussed with the help of Caselet (B) facts. The discussion was accordingly orchestrated in the classroom [Exhibit (TN)-I].............