Price discriminate
The ranking of the highest valuation of the objects may be affected by introducing the new bidders, thus affecting the bidding strategies in a different way that may lead to a decline in prices. Concerning the effect of price on various market structures, the outcome of the auction is affected by the number of bidders where they may tend to retreat from buying or form a ring, thus manipulating auctions’ results. The competitions become weaker when the number of bidders tends to bid against the ring members, affecting the final results. Unofficial auctions may follow at the end of official auctions between the members, resulting in splitting prices. In relation, the price also determined by the supply and demand curves of the goods traded. Therefore, the demand of many bidders purchasing one commodity may lead the seller to charge higher prices on the goods sold.
When the same provider sells identical goods and services at different prices in a competitive market, it leads to price discrimination. The buyer is charged a maximum price from what he is willing to pay in pure price discrimination. Companies or different firms use coupons in retail to differentiate buyers by their reserve price. At first, for the price discrimination to work out, imperfect discrimination has to be in the market. The prices could not be controlled by the producer in perfect competition, leading to impossibility in price discrimination. There needs to have monopoly power where the sellers cannot price take but only to price set. Prevention of re-sale is another condition that has to be to enhance price discrimination. Price discrimination does not exist where the consumer buys the goods at lower prices and resells it to make a profit to another customer who would have paid a higher price. The identification of several market segments leads to the occurrence of price discrimination. The possibility of market segments enables various groups to have several price elasticities of demand. The sensitivity of the customers to changes in prices leads to a firm changing different prices. For instance, the price may remain fair to the inelastic customers who continue to purchase the goods no matter the price rise, while the seller may opt to sell the goods expensively to the rich.