when a firm decides to charge a different price for every unit consumed and by doing so can charge the maximum possible price for each unit it sells. This allows them to capture all the consumer surplus under the demand curve and to be able to convert it into producer surplus. This type of price discrimination is also commonly referred to as perfect price discrimination as it requires perfect knowledge of individuals valuations of goods. Therefore this type of price discrimination is quite rare.
Below highlights a breakdown of how a firm tries to perfectly extract as much consumer surplus away from the market to convert into producer surplus by charging each consumer their maximum valuation, as a result there is no consumer surplus left over as the demand and supply diagram shows below.
