ABSTRACT
Which item from this list does not belong? That’s right, price. Price discrimination is legal, unless it substantially limits competition, and firms will activity pricediscriminate in an effort to enhance profits.1 As discussed in Chapter 12, a firm with monopoly power has some control over the output price when it is facing a negatively sloping demand curve. Thus, it may be possible to increase profits by discriminating among consumers and selling the same product to various customers at different prices. For example, a bar may sell drinks at a lower price per unit during happy hour or a cereal company may offer coupons that reduce the price per unit.
