Three main reasons for price discrimination are as follows:
(a) The monopolist is aware of consumer ignorance for the cost of product due to lack of knowledge and communication of proper information.
(b) In rendering professional services or personal services discriminating price can be charged by a monopolist from different customers. A doctor specialist having monopoly in his professional specialization can charge higher fee from rich and lesser fee from poor clients. Such discrimination is possible when the service rendered or commodities cannot be resold.
(c) Price discrimination may be practiced under the circumstances when cost difference might exist due to distance between one market or another, lower price in poorer market and higher prices in sophisticated market could be charged. Such price discrimination occurs when firm’s different markets are separated by distance or by national frontiers; cheaper commodity in one market may not be resold at dearer markets because of excessive cost of transportation.