Question

State whether the following statement is TRUE and FALSE.

There is no price discrimination under Monopolistic competition.

Options

• True

• False

Answer 1

The statement is false.

Reason:

Price discrimination is typically connected with monopoly power, however it is not completely absent in monopolistic competition. Because firms in monopolistic competition have some degree of market power due to product differentiation, they can and frequently utilize price discrimination methods (e.g., geography or customer type discounts). It is not a property exclusive to monopolies, though it is less common than in pure monopolies.