Price discrimination occurs when a company sells the same product or service to different consumers at different prices. This can be achieved based on various factors including customer demographics, purchase history, timing of purchase, or other characteristics. The primary goal of price discrimination is to maximize profits by capturing consumer surplus—the difference between what consumers are willing to pay and what they actually pay. There are three degrees of price discrimination: first-degree (personalized pricing), second-degree (based on quantity consumed), and third-degree (based on demographic factors).