Degrees of Price Discrimination.

Price discrimination occurs in three main states or degrees, namely;

First degree price discrimination: This occurs when the seller charges different prices for each of the units of the commodity sold.

(In this case, the seller takes the whole consumer's surplus.  It is also termed "take it or leave it" price discrimination or perfect price discrimination.

Second degree price discrimination:- Here, the seller charges more than two different prices for the same unit of his commodity.  The seller takes bigger portion of the consumer's surplus which increases his revenue.  

Third degree price discrimination:- This occurs when the seller charges only two different prices for the same unit of his commodity, which is also called "less discrimination".  The seller only takes a small portion of the consumer's surplus.