Under what conditions can a firm sell the same product at different prices?

This is a clear example of price discrimination, which can be defined as when sales of identical goods or services are transacted at different prices from the same provider. This would not exist in monopolistic competition or in a free market, as in both cases each business has no individual power. However, this should theoretically exist in a monopoly firm, as they are "price-makers" and control the market for that good/service, and can decide to sell at higher prices for consumers who are willing to pay more. Price discrimination can reduce efficiency by miss-allocating output among consumers, but can also be viewed as biased and unfair. A classic example of price discrimination is the different values of cinema seat tickets for children, students, adults and elderly people.

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Answered by Anita T. Economics tutor

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