Economic Analysis

The first 200 words of this essay...

A number of national newspapers are offered at a considerable discount at most British university Student Unions. Discuss how the frameworks of monopolistic competition and price discrimination would respectively explain this. Which framework best captures the rationale for this practice?

Introduction

In this essay, I intend to examine and critically analyse the extent to which the frameworks of monopolistic competition and price discrimination could be applied to the situation of selected national newspapers being offered to university students at significantly discounted prices.

Monopolistic competition is one of the four main market structures in an economy along with perfect competition, oligopoly and monopoly. Originating from Edward Chamberlain (1933), the theory of monopolistic competition as a type of market structure, refers to the imperfect competition that takes place among a large amount of firms.

Price discrimination is defined as, 'charging different prices to different customers for the same good or service', which 'is possible only if the supplier has some monopoly power, and can identify the customer, and the customer cannot resell the good, or it is expensive to do so' (Black 1997: 363).

I will also aim to compare and evaluate which of