Agri-Tech supplies a patented sweetener to various food processors.It has noticed that the value of the sweetener varies dramatically from one buyer to another,depending on the end-use demand.But its experiments with charging higher prices to some buyers have failed because:

Question

Quizplus · Accepted Answer

Market arbitrage refers to the practice of taking advantage of price differences between buyers in different markets. In this case, if Agri-Tech charges higher prices to one buyer, that buyer may simply sell the sweetener to another buyer who is willing to pay a lower price. This would result in lost sales for Agri-Tech and may not lead to higher profits. Therefore, market arbitrage makes it difficult for Agri-Tech to implement price discrimination.

Agri-Tech Supplies a Patented Sweetener to Various Food Processors