Making monopoly profits and price discrimination on food commodity markets

Annotation: A model of monopoly in the food sector assumes a single firm on the market, which produces and offers a unique (homogeneous) product, for which there are no close substitutes. The firm takes into account only the expected behavior on the demand side (consumers), because there are no competitive firms in the industry. An impossibility of access to a particular market is associated with the so-called barriers of entry into the industry. The barriers then become a source of monopoly power. The fact that a monopoly firm has a certain monopoly power allows it to use a pricing strategy called price discrimination. The essence of price discrimination is to gain consumer surplus and convert it into additional profit for the company without having to take the costs into consideration. Second-degree price discrimination consists of setting different prices for different cumulative quantities of a commodity. By this discrimination a monopoly may obtain a part of the consumer surplus (but not all of it). The aim of this paper is to express a rate of exploitation of consumer surpluses in the second degree price discrimination in relation to selected food products of monopolistic character. This concerns the gain of consumers' buying individual food products compared with buying large (cumulative) packages of the product. The result of the paper will answer a research question: how is second degree price discrimination done in practice? The methodology of scientific research will be based on monitoring the prices of selected food products in retail chains and a comparative analysis of collected data. The survey shows that, thanks to second-degree price discrimination seller receives consumer surplus amounting to 37.41% for the sale of individual piece of the product.