Case Interview Prep

Answer: B - Lack of competition is not a necessary condition to institute price discrimination.

Key Takeaway: Price discrimination occurs when different customers are offered the same goods and services at different prices. There are a number of reasons behind price discrimination including customers’ inability to pay and quantities of goods sold. A number of conditions are necessary for companies to institute price discrimination including the ability to set one’s prices, the presence of separate markets for the goods and services, and different demand elasticity for the markets.