A market force that can prevent firms from price discriminating is

Question

Quizplus · Accepted Answer

Arbitrage refers to the practice of buying a good in a lower-priced market and selling it in a higher-priced market. If a firm attempts to price discriminate, selling the same good at different prices to different groups of customers, arbitrageurs can purchase the good at the lower price and sell it to the group of customers purchasing at the higher price, eliminating any potential profits from price discrimination. Therefore, arbitrage is a market force that can prevent firms from price discriminating.

A Market Force That Can Prevent Firms from Price Discriminating