<P> Price discrimination allows a monopolist to increase its profit by charging higher prices for identical goods to those who are willing or able to pay more . For example, most economic textbooks cost more in the United States than in developing countries like Ethiopia . In this case, the publisher is using its government - granted copyright monopoly to price discriminate between the generally wealthier American economics students and the generally poorer Ethiopian economics students . Similarly, most patented medications cost more in the U.S. than in other countries with a (presumed) poorer customer base . Typically, a high general price is listed, and various market segments get varying discounts . This is an example of framing to make the process of charging some people higher prices more socially acceptable . Perfect price discrimination would allow the monopolist to charge each customer the exact maximum amount he would be willing to pay . This would allow the monopolist to extract all the consumer surplus of the market . While such perfect price discrimination is a theoretical construct, advances in information technology and micromarketing may bring it closer to the realm of possibility . </P> <P> It is very important to realize that partial price discrimination can cause some customers who are inappropriately pooled with high price customers to be excluded from the market . For example, a poor student in the U.S. might be excluded from purchasing an economics textbook at the U.S. price, which the student may have been able to purchase at the Ethiopian price' . Similarly, a wealthy student in Ethiopia may be able to or willing to buy at the U.S. price, though naturally would hide such a fact from the monopolist so as to pay the reduced third world price . These are deadweight losses and decrease a monopolist's profits . As such, monopolists have substantial economic interest in improving their market information and market segmenting . </P> <P> There is important information for one to remember when considering the monopoly model diagram (and its associated conclusions) displayed here . The result that monopoly prices are higher, and production output lesser, than a competitive company follow from a requirement that the monopoly not charge different prices for different customers . That is, the monopoly is restricted from engaging in price discrimination (this is termed first degree price discrimination, such that all customers are charged the same amount). If the monopoly were permitted to charge individualised prices (this is termed third degree price discrimination), the quantity produced, and the price charged to the marginal customer, would be identical to that of a competitive company, thus eliminating the deadweight loss; however, all gains from trade (social welfare) would accrue to the monopolist and none to the consumer . In essence, every consumer would be indifferent between (1) going completely without the product or service and (2) being able to purchase it from the monopolist . </P> <P> As long as the price elasticity of demand for most customers is less than one in absolute value, it is advantageous for a company to increase its prices: it receives more money for fewer goods . With a price increase, price elasticity tends to increase, and in the optimum case above it will be greater than one for most customers . </P>

Who created the first monopoly of goods in america