Price Discrimination

First, second, and third degree — consumer/producer surplus and deadweight loss under each regime

Regime

Perfect (1st)
Block (2nd)
Segment (3rd)
Uniform

Market

First-degree (perfect): monopolist charges each consumer exactly their willingness-to-pay. Zero DWL — all surplus extracted. Informationally demanding; rare in practice.

Second-degree (block pricing): different prices for different quantities (e.g., bulk discounts). Approaches first-degree as blocks increase. Some consumer surplus remains.

Third-degree (market segmentation): different prices to identifiable groups (students, seniors). Efficiency depends on whether excluded markets are served. Higher price in less elastic market.

Uniform monopoly: single price maximizes profit at MR = MC. Large DWL — most restrictive for consumers.