The analytical picture of monopolies presented in our last lecture may be too simple. Monopolies may not always charge the same price to every customer – they can choose to charge different prices, a phenomenon known as price discrimination. Monopolies are regulated by governments to limit their market power, yet in some cases governments may encourage the operation of monopolies. These cases are discussed in greater detail in this lecture.
The U.S. Department of Justice enforces antitrust laws. Image courtesy of John Taylor on Flickr.
Keywords: Monopoly; price discrimination; natural monopolies; price regulation; antitrust policy; mergers; contestable markets.
Read the recitation notes, which cover new content that adds to and supplements the material covered in lecture.
Before watching the lecture video, read the course textbook for an introduction to the material covered in this session:
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- Examples of Price Discrimination (00:08:32)
Examples of Price Discrimination
- Sources of Monopoly Formation: Cost Advantages (00:05:58)
Sources of Monopoly Formation: Cost Advantages
- Sources of Monopoly Formation: Government Actions (00:08:32)
Sources of Monopoly Formation: Government Actions
- Price Regulation (00:15:05)
- Contestable Market: The Airline Industry (00:10:13)
Contestable Market: The Airline Industry
This concept quiz covers key vocabulary terms and also tests your intuitive understanding of the material covered in this session. Complete this quiz before moving on to the next session to make sure you understand the concepts required to solve the mathematical and graphical problems that are the basis of this course.
These optional resources are provided for students that wish to explore this topic more fully.
See the [Perloff] companion website for an overview of the main topics covered in the chapter, as well as quizzes, applications, and other related resources.