Asked by Abylay Tastanbekov on Jun 06, 2024
Verified
Big Corp.(BC) operated in all 50 states.In all of the states except Oregon,BC was the dominant firm in its industry.Small Corp.(SC) operated only in Oregon,but was the dominant firm in that state.BC decided it wanted to destroy SC so that it would become dominant in Oregon.BC cut its prices and sold below cost in Oregon,while maintaining regular prices everywhere else.This is an example of:
A) first-line price discrimination.
B) secondary level price discrimination.
C) tertiary level price discrimination.
D) super-tertiary level price discrimination.
Price Discrimination
The practice of selling the same product to different buyers at different prices, often based on market power.
Dominant Firm
A company that has a large share of the market and can influence market conditions and prices.
- Assess how actions that impede competitive markets are related to laws enacted to maintain market fairness.
Verified Answer
SN
Stephen NagatoshiJun 10, 2024
Final Answer :
A
Explanation :
Big Corp.is engaging in local and territorial price discrimination (lower prices only in Oregon)with the aim of driving Small Corp.(the dominant player in Oregon)out of business.This type of price discrimination is classified as primary level or first-line price discrimination.
Learning Objectives
- Assess how actions that impede competitive markets are related to laws enacted to maintain market fairness.