Monopoly Price Discrimination:  

Because a monopoly faces the market demand curve, it faces consumers who value the good at different prices. The practice of selling at different prices in different markets is called Price discrimination. While a single-price monopoly charges the same price for each unit of output sold, a price discriminating monopoly charges Different prices to different customers based on their willingness to pay for the good. This is not based on prejudice, stereotypes, or ill-will toward any person or group. The requirements for price discrimination are that the demand curve must be a downward-sloping, the firm must be able to identify consumers willing to pay more and the firm must be able to prevent low-price customers from reselling to high-price customers as well as arbitrage.

Price discrimination benefits monopoly at the same time it benefits a group of consumers. When price discrimination lowers price for some consumers below what they would pay under a single-price policy, it benefits consumers as well as firm. Under perfect price discrimination, the firm charges each customer the most the customer would be willing to pay for each unit he or she buys. By assuming that firms could somehow find out maximum price customers would be willing to pay for each unit of output it sells. The firm can increase profits even further, but at expense of consumers. Most monopolists cannot perfectly price discriminate, so they discriminate by customer groups , regional markets, consumer groups (senior discounts, volume users) and time of sale (on- vs. off-season; early bird specials; day vs. night use, weekend vs. weekday. The types of consumers can be distinguished on the basis of their sensitivity to price. High price is offered to consumers with low price elasticity of demand and low price is offered to consumers with high price elasticity of demand.