Market Power, Price Discrimination, and Alocative Efficiency in Assignment

Market Power, Price Discrimination, and Alocative Efficiency in Intermediate-Goods Market - Assignment Example Such firms are usually said to have the capabilities of affecting either the standing market price or the total quantity of products within the market single handedly. Price discrimination is described as a situation whereby identical goods from the same organization exist in the market but sold at different prices. This mainly occurs in monopolistic or oligopolistic markets. With reference to the guidelines given, this paper will critically analyze the Market power, price discrimination, and allocative efficiency in intermediate-goods market while thinking about it in an economic way. In addition to this, the paper will aim at establishing how this topic will be a motivation to the marketing manager of an organization (Katz 2007). The party that would be interested with this topic is the marketing manager of an organization that has a command in the market. ... Such aspects balance the consumer’s ability to buy products, as, due to differentiated prices in the case of price discrimination, the consumers, regardless of their income levels, they are able to afford a good or a service. For instance, in the case of students, firms often reduce their products and services by 10% for the sake of students. They are typical examples of individuals in the society with low incomes. Due to this fact, their demands can be said to be more elastic. Due to reduced prices, they are able to access these services as well as products due to the reduced prices (Rey and Verge, 2008). Further, this topic, especially the market power, is essential as studying about it ensures that the marketing manager, or any one given the mandate to see an organization attain a commanding lead in the market, obtains appropriate information on how his company can generate sizable or substantial benefits in its operations while experiencing relatively low levels of liabili ties. . General Setting This topic is underlain in monopoly aspect of macroeconomics. To understand this, it is essential that one take on each notion at a time. Market power; commonly, market power is usually referred to as monopoly power. An organization with market power is usually said as having control putting the terms as well as conditions of exchange into consideration. As such, such an organization can effectively raise the prices of its products as well as its services and still not lose its clients. On the other hand, the company can reduce the prices and still not cause a price war amongst the competitors, which is usually ruining. When an organization offers a differentiated product or a service to the market, it is