The first type of price discrimination, also called perfect price discrimination, occurs when a firm sets the highest price someone is willing to pay for it, recovering the surplus of the consumer. The second consists in charging differentiated prices depending on the quantity purchased by the consumer; generally the price tends to decrease as the quantity of the product increases. And the third and final price discrimination involves dividing consumers into different markets and imposing different prices (Gravelle, Rees, 2004, p. 194-204). In addition to this, companies that price discriminate must meet certain conditions. First of all they must be price makers, thus regulating the price as they want; secondly, the company must sell a good that will not be subject to further trade at a higher price; as a third and final consideration, the market must be well organized in order to classify the different categories of buyers based on their willingness to pay (Littenberg and Tregarthen 2009, p..
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