Price discrimination is a common pricing strategy used by a monopolist having discretionary pricing power. Explain Types of Price discrimination.

Price discrimination is a strategy that involves selling the same product at different prices to different groups of consumers. It is often used by monopolistic companies that have the power to set their own prices. There are three main types of price discrimination:

1. First Degree Price Discrimination: This is also known as perfect price discrimination. In this case, the seller charges each buyer their maximum willingness to pay. This means that the seller extracts all the consumer surplus and turns it into its own profit. This type of price discrimination is rare because it requires the seller to know exactly what each buyer is willing to pay.

2. Second Degree Price Discrimination: This involves charging different prices based on the quantity purchased. For example, a company might offer a discount to customers who buy in bulk. This type of price discrimination is common in industries like wholesale and retail.

3. Third Degree Price Discrimination: This involves charging different prices to different demographic groups. For example, a movie theater might charge lower prices for students or seniors. This type of price discrimination is based on the idea that different groups of consumers have different price sensitivities.

In all these cases, the goal of price discrimination is to increase profits by capturing more consumer surplus. However, it's important to note that price discrimination can be controversial and is often subject to legal restrictions.