Perfect price discrimination

Perfect price discrimination occurs when a seller charges each customer the maximum price they are willing to pay for a product or service, capturing all the consumer surplus. In this scenario, the seller knows each individual's valuation perfectly and adjusts prices accordingly, effectively eliminating the difference between what consumers pay and what they value the product at. This maximizes the seller’s profit, as each customer pays exactly their subjective value, without any leftover surplus or consumer benefit. While rare in practice, the concept helps illustrate how price variation can be used to extract the full potential value from each customer.