Our focus will primarily be on 3rd degree price discrimination, but the insights we gain will be relevant to other forms of price discrimination.

Two things are necessary in any market that is to successfully practice price discrimination. These are:

The ability to identify which consumers have elastic and which have inelastic demand
The ability to prevent those consumers who buy at the lower prices from reselling to those who would have to pay higher prices.

Conditions equivalent to these are necessary for any form of price discrimination. We'll consider some examples and see how this works in different markets.