A discriminating monopoly is a single entity that charges different prices for different consumers. Higher price will be charged for price inelastic consumer and vice versa.
Types of Price Discrimination
i) Personal: Different prices are charged for different individuals (for example the railways give tickets at concessional rate to the "senior citizens" for the same journey).
ii) Geographical: Different prices are charged at different places for the same product (for example, a book sold within India at a price is sold in a foreign country at lower price). On their, China drops its goods in Indian market. As a result, watch and toy industries closed down their business.
iii) On the basis of use: Different prices are charged according to the use of a product (for example lower rates are charged by Tamil Nadu Electricity Board for domestic .useof electricity and higher rates are charged for commercial and industrial use).

i) Natural Monopoly:
Ownership of the natural raw materials [Eg.- Goldmines (Africa), Coalmines, Nickel (Canada), etc.]
ii) State Monopoly:
Single supplier of some special services (Eg.- Railways in India).
iii) Legal Monopoly:
A monopoly firm can get its monopoly power by getting patent rights, trade mark from the government.

Price discrimination is possible only if the following conditions are fulfilled :
i. The demand must not be transferable from the high priced market to the low priced market.
ii. The monopolist should keep the two markets or different markets separate so that the commodity will not be moving from one market to the other market.

(i) In duopoly there are only two sellers.
(ii) Each seller is fully aware of his rival's motive and actions.
(iii) Both sellers may collude.
(iv) They may enter into cut-throat competition.
(v) There is no product differentiation.
(vi) They fix the price to get maximum profit.

Firm : A single production unit in an industry, producing a large or a small amount of the commodity. (eg) Hamam, Lux are 2 firms.
Industry : A group of firms producing the same product. (eg) soap industry.

(i) Expenditure involved in selling the product is called selling cost.
(ii) It is the cost incurred to alter the position of the demand curve for a product. (eg) advertisement.
(iii) Sales promotion by advertisement is called non-price competition.

First degree price discrimination:
(i) A monopolist charges the maximum price that a buyer is willing to pay.
(ii) This is perfect price discrimination.
(iii) Consumer's surplus is zero.
Second degree price discrimination:
(i) Price charged is such that a part of consumer's surplus is taken away by the sellers.
(ii) This is called imperfect discriminating monopoly.
(iii) Buyers are divided into groups and a different price is charged for each group. (eg) cinema theaters charge different price for the same film for different class.
Third degree price discrimination
(i) The entire market is split into a few sub markets and different prices are charged in each sub market.
(ii) The division is done based on age, sex, location. (eg) senior citizens pay lower fares in railways.

In perfect competition there is freedom for new firms to enter into the industry but in monopoly no competitor can enter the market except for the monopolist.

(i) Buyers and sellers of a commodity or a service. A commodity is bought and sold.
(ii) Price agreeable to buyer and seller.
(iii) Direct exchange and indirect exchange.