How would a regulator of a monopoly think differently about regulating price discrimination depending on whether the regulator's objective is to maximize efficiency or to maximize consumer surplus?
What will be an ideal response?
This is most clearly demonstrated for the case of perfect (first degree) price discrimination where such price discrimination leads to full efficiency but no consumer surplus. A regulator would view perfect price discrimination favorably if his objective is to maximize efficiency and unfavorably if his objective is to maximize consumer surplus. It becomes less clear when we think about second and third degree price discrimination where the regulator's views would depend on the particulars of an industry.
You might also like to view...
Which of the following is NOT a contractual savings institution?
A) a life insurance company B) a pension fund C) a savings and loan association D) a fire and casualty insurance company
When the central bank announces the inflation rate that it will achieve over the next one to four years, it is following a strategy known as
A) money targeting. B) inflation targeting. C) a currency board. D) real business cycle targeting.
Economics is about the allocation of scarce resources. Which of the following is NOT an example of economic scarcity?
A) If Steve goes to see a movie on Saturday, he will not be able to afford buying ice cream. B) If Jenny studies for her economics quiz this evening, she will not have time to walk her dog. C) If General Motors increases its production of SUVs this year, it will have to spend more on advertising. D) If Barnes and Noble bookstore increases the number of titles it carries, it will have to reallocate shelf space to accommodate the new titles.
On May 12, 2011, the U.S. dollar was worth 0.61 British pounds. How many dollars did it take to buy one British pound?
a. 1.19 b. 1.61 c. 1.64 d. 2.19