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Discriminating Monopolist

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PPGPortal > Home > Concept Dictionary > D, E > Discriminating Monopolist
 

Discriminating Monopolist 

A monopolist who is able to sell to each individual buyer at his or her particular reservation price.

(Dwayne Benjamin, Toronto PPG 1002H)

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A discriminating monopolist differs from an “ordinary” monopolist in that the discriminating monopolist can sell their product at different prices to different individuals.

For example, see the graphic below which provides an example of how a market for apprtment works with a "normal" monopolist and a discriminating monopolist. An "ordinary" monopolist is forced to sell his product to all individuals at the same price. In this situation, there are consumers who would be willing to pay more for an apartment than the landlord charges them. The discriminating monopolist is able to charge each renter his reservation price, thereby increasing his profit. Under a discriminating monopolist, since every consumer pays his reservation price, there is no consumer's surplus for any of the consumers.

 

 

 

References

 

Prepared by students at the University of Toronto School of Public Policy and Governance and edited by Ben Eisen.

 

Graphics developed by Dwayne Benjamin.

     

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© University of Toronto 2008
School of Public Policy and Governance