Three points: 1. Consumers can't win because firms have asymmetric data and computing power. 2. Econ 101 supply and demand charts no longer apply since there is no "price." 3. Personalized pricing erodes or destroys consumer surplus.
Three points: 1. Consumers can't win because firms have asymmetric data and computing power. 2. Econ 101 supply and demand charts no longer apply since there is no "price." 3. Personalized pricing erodes or destroys consumer surplus.
@aaron_renn You can definitely show perfect price discrimination with simple supply and demand curves and indeed every 101 book does
@aaron_renn Many complain when price discrimination means that they pay more than others. No one complains when price discrimination means that they pay less. And, of those complaining, few consider how price is a remedy for scarcity.
@aaron_renn Yep. Aside from the skill companies with public pricing have in concealing the cheaper price and moving you to costlier one, the process of buying stuff feels extractive, even more since it can be based on your ability to pay.
@aaron_renn I think the more interesting question to explore deeper is under what contexts does differential pricing erode social trust and even efficiency. The article points to an earlier time when uniform pricing was tied to a perspective that *engendered* trust & efficiency:
@aaron_renn A) People's individual willingness to pay varies in time and place. B) And consumers really are not very rational. Take tipping. What's the difference with tips built into the menu price vs. an add-on. Even high-end restaurant with mandatory tips separate the menu vs. tip costs.
@aaron_renn What is "consumer surplus?" Do you mean savings?