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Does allowing firms to engage in third degree price discrimination (group pricing) always result in a lower consumer surplus? If your answer is yes, briefly

  1. Does allowing firms to engage in third degree price discrimination (group pricing) always result in a lower consumer surplus? If your answer is yes, briefly explain why. If your answer is no, give an example of when group pricing may actually be good for consumers.
  2. In our lectures on collusion, we always assume that firms are interacting with each other (playing the game) infinitely many times. Suppose that instead of playing the game infinitely many times, the firms instead played the game a million times. Is collusion still possible in this scenario? Explain why or why not.
  3. Does a horizontal merger always result in higher prices for consumers? If your answer is yes, briefly explain why. If your answer is no, give an example of when prices might go down after a merger.

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