Question

Whether price discrimination is good or bad for society as a whole? How does price discrimination affect output, and what is this effect on social welfare? Does price discrimination lead to a more efficient or less efficient outcome?

Answer 1

The society prefers a higher output to a smaller output, therefore when the price discrimination results to an increase in output it would promote the social welfare and can be said to be fair and justified. However in the cases when the discrimination will reduce output, it is undesirable on both counts. The total output that is sold by the monopolist in two markets may rise or fall as a result of price discrimination

We can say that the view point of optimum resource allocation and distributive efficiency provided the present distribution of income, the discrimination is not so­cially desirable however if we see from the expansion point of view the output as well as for and distri­bution of real incomes are more equitable, and therefore the price discrimination is justified socially.