A successful strategy of price discrimination requires that a firm be a price taker.

Question

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A successful strategy of price discrimination requires that a firm be able to differentiate customers based on their willingness to pay and charge different prices to different groups of customers. This requires the firm to have some level of market power and control over pricing, which is not possible if the firm is a price taker. Price takers are firms that have to accept the prevailing market price for their products and have no control over pricing.

A Successful Strategy of Price Discrimination Requires That a Firm