Price discrimination:

When a monopolist charges different prices from different buyers for the same commodity, she is known as the discriminating monopolist. Remember that price discrimination is not possible under perfect competition. Two conditions
must be fulfilled for price discrimination to be possible. They are,

1) the market must be divided into sub markets with different price elasticities,

2) this division must be effective in the sense that no reselling can occur from the low price market to the high price market

Price discrimination is possible due to the following reasons:

i) discrimination owing to consumer peculiarities   

ii) discrimination owing to the nature of the good

iii) discrimination due to distances and frontier barriers

iv) in some cases price discrimination occurs because of legal sanctions.

For example, the State Electricity Board charges different rates for different uses.

When a consumer is unaware of the fact that other consumers get the same commodity at lower prices, or she might have a false notion that higher prices imply higher quality or the difference in prices is so small that she simply ignores it.

Again, goods which cannot be resold, such as electricity, gas transport, cinema show, or the service which cannot be resold, for example, the services of a physicians, are prone to price discrimination.