Monopoly In Monopoly

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Monopoly and Price discrimination of Indian Railways --------------------------------------------------------------------------- Prepared By: Name :Mohamed Ali .K ID :2016hb74036 Email Assignment: Managerial Economics Do you think Indian Railway is an example for monopoly market? What are the types of price discrimination that Indian railway practice? Introduction In economics, monopoly in its pursuit form is the case of a single seller. The market demand for its product is the only constraint on the firm’s pricing policies. Barriers to entry prevent new firms from coming in to industry. It exists when delivery of a particular product or service is completely controlled by an individual…show more content…
Indian railway enjoys some part of the consumer surplus by employing the different methods of price discrimination. Following are the few factors that enable Indian railways to engage in price discrimination 1. It employs market segmentation which is based on various factors like age, sex, job type etc. 2. The products or services of Indian railways are not resalable and thereby restricts its discount customers to become resellers and benefit from arbitrage. 3. It has monopoly and hence is able to dictate the pricing terms and conditions to a greater extent, in spite of being owned and regulated by Indian government. Types of price discrimination 1. First degree price discrimination: In first degree price discrimination, price changes by customer 's willingness or ability to pay. It is perfect price discrimination and hence there is no consumer surplus. Auction is an example for this type of price discrimination. Indian railways do not employ any first degree price…show more content…
Second degree price discrimination: In second degree price discrimination, price changes in accordance with the quantity sold. Usually monopolist sets the block prices, under which prices are highest for first block of quantity bought and it is reduced for each successive purchase by the same customer. Indian railways employ second degree price discrimination as

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