Price discrimination is essentially a difference of price for the same product. Generally, Price discrimination refers to the situation where provider of goods or services implements a different sales price or charge standard for different recipients of same level and same quality of goods or services. Operators have no reasonable grounds for providing a different price of the same kind of goods or services to the buyers under the same conditions; this constitutes price discrimination. Price discrimination is an important monopolistic pricing behavior; it is a pricing strategy for a monopoly enterprise to obtain excessive profits through the difference in price. In a perfectly competitive market, all consumers pay the same price for homogeneous products. If consumers have sufficient economic knowledge, then the difference of price on each fixed quality product will not exist because any seller who attempts to ask a price which is higher than the current market price will find that nobody would buy the product from him or her. However, in a monopoly or oligopoly market, price discrimination is very common as different consumers hold different opinions on the value of products or services; the difference of price is caused by the demand not only the cost. The prices which consumers are willing to pay usually differ from the market price; so the difference between market price and expected price generates a consumer surplus, which is the potential source of profit for the seller. For the manufacturer, as long as the sales price of the products is higher than the marginal cost, it will be profitable. However, if the manufacturer is to develop a uniform sales price, and this price is higher than the marginal cost but lower than the price which consumers expected, the manufacturer will lose some of that profit opportunity.
Thus it can be seen, if firms want to maximize