Discussion on Market Structures
Part 1. Price discrimination
Firms may engage in price discrimination to maximize their profits. Describe the conditions necessary for a firm to implement price discrimination, and give a personal example of when you have experienced price discrimination. (max. 1.5 points)
Part 2. The case against patents.
Patents create government-granted and generally accepted monopolies even though monopolies are not usually encouraged as they tend to restrict output and charge a higher price leading to lower consumer surplus. However, some criticism towards the usefulness of patents exist, and even firms start questioning the benefits of patents.
Listen to the following podcast Planet Money: The case against patents (Links to an external site.) and discuss:
- What are the economic benefits and costs of patents? (max. 1 point)
- Even though firms are generally eager to file patents, why is a company like Tesla giving up its patents? Which industry would likely to be hurt most without patents and why? (max. 1.5 points)