How does price discrimination impact consumer surplus and overall economic efficiency in a perfectly competitive market?

Price discrimination occurs when a seller charges different prices to different consumers for the same product. In a perfectly competitive market, this practice can reduce consumer surplus, which is the difference between what consumers are willing to pay and what they actually pay. For example, if a movie theater charges higher prices for evening shows compared to matinees, those who pay less during matinees enjoy more consumer surplus, while those paying more feel they get less value. However, price discrimination can lead to greater overall economic efficiency because it allows a seller to capture more consumer surplus and potentially increase production, benefiting both the seller and some consumers. In this way, while some consumers may lose out, the overall market can become more efficient as resources are allocated based on willingness to pay.