Why Is It Important for Firms Practicing Price Discrimination to Prevent

Multiple Choice

Why is it important for firms practicing price discrimination to prevent arbitrage of their product?

A) Arbitrage is unrelated to firms' profits since the products are still being sold.
B) Smugglers alter product quality as they pass from market to market, hence harming the reputation and future profits of firms.
C) Arbitrage reduces the profits from price discrimination for firms, and increases profits for smugglers.
D) Arbitrage increases deadweight loss in the market.