Uniform Price Discrimination

1. Explain whether or not your employer (or any other firm of your choosing) uses uniform pricing. Using your example, explain why uniform pricing may not be optimal.

Uniform pricing is also called monopoly pricing. In uniform pricing, buyers choose quantity of goods at a fixed price, freely. A seller later charges the same price for every unit of a product. Margin percentage that has increased in uniform pricing is equivalent to the reciprocal of absolute value of price elasticity of demand. Company X in its verge to improve profit margin applied uniform pricing (Viglia, 2014). It had the responsibility to understand what all the potential buyers want and have prices for every product set. To an extent Company X considered uniform pricing to be better than cost-plus pricing, but uniform pricing was not the best, since it brought in the idea of monopoly. In monopoly, it

Price discrimination is practiced by a seller through giving tagging different prices to goods under different markets. Product cost details differentiates price discrimination from product differentiation (Vogel & National Bureau of Economic Research. 2009). First degree price discrimination enables the seller to know maximum price in a monopoly market. Sellers know the price every consumer is willing to pay for a good or service. First degree price discrimination is seldom possible because the seller gains revenues from consumer surplus, thus difficult to fall in loss (Corsetti & Dedola, 2003). Profit realized is always equivalent to the summation of both producer surplus and consumer surplus. A good example that displays the technique in first degree price discrimination is car dealership. A car dealer will want to know what buyers have in market as their prices. Car dealers will then evaluate total prices are stand at a fixed price that would gain them profit much compared to what they had as surplus in