To succeed at price discrimination the monopolist must prevent arbitrage.

Question

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Arbitrage refers to the practice of buying a product at a low price in one market and then selling it in another market where the price is higher. If customers can easily engage in arbitrage, the monopolist's attempt at price discrimination would fail. Therefore, to succeed at price discrimination, the monopolist must prevent arbitrage by creating barriers between the different customer groups or geographic markets. This can be done through tactics such as product differentiation, bundling, or limiting resale opportunities.

To Succeed at Price Discrimination the Monopolist Must Prevent Arbitrage