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Price discrimination refers to the act of charging different prices for different units of a commodity, though all these units are in fact indentical so far as their physical characteristics are concerned.

Different economist, have given different definitions of Price discrimination. They are as follows:

Professor Stigler defines price discrimination as the sales of technically similar products at prices which are not proportional to marginal costs.

According to Professor Stonier and Hague, "Discriminating monopoly or price discrimination occurs when a monopolist charges different prices for different units of a commodity even though these units are homogeneous in nature so far physical nature is concerned."

Now we will discuss about the Types of Price Discrimination in detailed one by one:

1. Personal Discrimination,
2. Local Discrimination,
3. Trade Discrimination

Personal Discrimination: It occurs when different prices are charged from different customers according to the intensity of their desire and according to their incomes. For eg, a higher price may be charged from the persons who are eager more to buy than from others or a higher price may be charged from the rich person than from the poor.

Local Discrimination: It takes place when a monopolist sells his product at a lower price in one market and charges a higher price in another market. For eg, Dumping is an example of local discrimination. Under it, a product sells his goods at a lower price in the foreign market than in the home market.

Trade Discrimination or Use Discrimination: It occurs when a monopolist charges lower price for one trade use than for another trade or use. For example, electricity is supplied at a lower price for industrial purposes and at higher price for the domestic purposes, like cooking, freeze, etc. and higher price for domestic lighting.

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