For a pure monopolist who engages in price discrimination, this price discrimination will...

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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The best answer for this is that engaging in price discrimination will allow a monopolist to enjoy greater profits than it could have enjoyed if it charged the same price to everyone.  

The monopolist must identify different segments of its market that are willing to pay different prices.  It must then be able to charge different prices to those different segments without fear that the customers will be able to engage in arbitrage.  If the monopolist can do these things, it will be able to sell to all segments of the market at the highest price that each segment will bear.  This will result in greater profits than if the monopolist had to sell to all segments at the price that the lowest-paying segment would bear.

Thus, price discrimination leads to greater profits for a monopolist.


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