Price discrimination

Personalised pricing: The demise of the fixed price? external link

2021

Abstract

An online seller or platform is technically able to offer every consumer a different price for the same product, based on information it has about the customers. Such online price discrimination exacerbates concerns regarding the fairness and morality of price discrimination, and the possible need for regulation. In this chapter, we discuss the underlying basis of price discrimination in economic theory, and its popular perception. Our surveys show that consumers are critical and suspicious of online price discrimination. A majority consider it unacceptable and unfair, and are in favour of a ban. When stores apply online price discrimination, most consumers think they should be informed about it. We argue that the General Data Protection Regulation (GDPR) applies to the most controversial forms of online price discrimination, and not only requires companies to disclose their use of price discrimination, but also requires companies to ask customers for their prior consent. Industry practice, however, does not show any adoption of these two principles.

Bibtex

Article{Poort2021,
	title = {Personalised pricing: The demise of the fixed price?},
	author = {Poort, J. and Zuiderveen Borgesius, F.},
	url = {https://www.ivir.nl/publicaties/download/The-Demise-of-the-Fixed-Price.pdf},
	year = {0304},
	date = {2021-03-04},
	abstract = {An online seller or platform is technically able to offer every consumer a different price for the same product, based on information it has about the customers. Such online price discrimination exacerbates concerns regarding the fairness and morality of price discrimination, and the possible need for regulation. In this chapter, we discuss the underlying basis of price discrimination in economic theory, and its popular perception. Our surveys show that consumers are critical and suspicious of online price discrimination. A majority consider it unacceptable and unfair, and are in favour of a ban. When stores apply online price discrimination, most consumers think they should be informed about it. We argue that the General Data Protection Regulation (GDPR) applies to the most controversial forms of online price discrimination, and not only requires companies to disclose their use of price discrimination, but also requires companies to ask customers for their prior consent. Industry practice, however, does not show any adoption of these two principles.},
	keywords = {algorithms, frontpage, GDPR, gegevensbescherming, Personalisation, Price discrimination, Privacy},
}

Does everyone have a price? Understanding people’s attitude towards online and offline price discrimination external link

Poort, J. & Zuiderveen Borgesius, F.

Internet Policy Review, vol. 8, num: 1, 2019

Abstract

Online stores can present a different price to each customer. Such algorithmic personalised pricing can lead to advanced forms of price discrimination based on the characteristics and behaviour of individual consumers. We conducted two consumer surveys among a representative sample of the Dutch population (N=1233 and N=1202), to analyse consumer attitudes towards a list of examples of price discrimination and dynamic pricing. A vast majority finds online price discrimination unfair and unacceptable, and thinks it should be banned. However, some pricing strategies that have been used by companies for decades are almost equally unpopular. We analyse the results to better understand why people dislike many types of price discrimination.

Bibtex

Article{Poort2019b,
	title = {Does everyone have a price? Understanding people’s attitude towards online and offline price discrimination},
	author = {Poort, J. and Zuiderveen Borgesius, F.},
	url = {https://policyreview.info/articles/analysis/does-everyone-have-price-understanding-peoples-attitude-towards-online-and-offline},
	year = {0212},
	date = {2019-02-12},
	journal = {Internet Policy Review},
	volume = {8},
	number = {1},
	pages = {},
	abstract = {Online stores can present a different price to each customer. Such algorithmic personalised pricing can lead to advanced forms of price discrimination based on the characteristics and behaviour of individual consumers. We conducted two consumer surveys among a representative sample of the Dutch population (N=1233 and N=1202), to analyse consumer attitudes towards a list of examples of price discrimination and dynamic pricing. A vast majority finds online price discrimination unfair and unacceptable, and thinks it should be banned. However, some pricing strategies that have been used by companies for decades are almost equally unpopular. We analyse the results to better understand why people dislike many types of price discrimination.},
	keywords = {algoritmen, Consumentenrecht, frontpage, Price discrimination},
}

Online Price Discrimination and EU Data Privacy Law external link

Zuiderveen Borgesius, F. & Poort, J.

Journal of Consumer Policy, vol. 2017, 2017

Abstract

Online shops could offer each website customer a different price. Such personalized pricing can lead to advanced forms of price discrimination based on individual characteristics of consumers, which may be provided, obtained, or assumed. An online shop can recognize customers, for instance through cookies, and categorize them as price-sensitive or price-insensitive. Subsequently, it can charge (presumed) price-insensitive people higher prices. This paper explores personalized pricing from a legal and an economic perspective. From an economic perspective, there are valid arguments in favour of price discrimination, but its effect on total consumer welfare is ambiguous. Irrespectively, many people regard personalized pricing as unfair or manipulative. The paper analyses how this dislike of personalized pricing may be linked to economic analysis and to other norms or values. Next, the paper examines whether European data protection law applies to personalized pricing. Data protection law applies if personal data are processed, and this paper argues that that is generally the case when prices are personalized. Data protection law requires companies to be transparent about the purpose of personal data processing, which implies that they must inform customers if they personalize prices. Subsequently, consumers have to give consent. If enforced, data protection law could thereby play a significant role in mitigating any adverse effects of personalized pricing. It could help to unearth how prevalent personalized pricing is and how people respond to transparency about it.

Bibtex

Article{Borgesius2017b,
	title = {Online Price Discrimination and EU Data Privacy Law},
	author = {Zuiderveen Borgesius, F. and Poort, J.},
	url = {https://www.ivir.nl/publicaties/download/JCP_2017.pdf},
	doi = {https://doi.org/DOI 10.1007/s10603-017-9354-z},
	year = {0725},
	date = {2017-07-25},
	journal = {Journal of Consumer Policy},
	volume = {2017},
	pages = {},
	abstract = {Online shops could offer each website customer a different price. Such personalized pricing can lead to advanced forms of price discrimination based on individual characteristics of consumers, which may be provided, obtained, or assumed. An online shop can recognize customers, for instance through cookies, and categorize them as price-sensitive or price-insensitive. Subsequently, it can charge (presumed) price-insensitive people higher prices. This paper explores personalized pricing from a
legal and an economic perspective. From an economic perspective, there are valid arguments in favour of price discrimination, but its effect on total consumer welfare is ambiguous. Irrespectively, many people regard personalized pricing as unfair or
manipulative. The paper analyses how this dislike of personalized pricing may be linked to economic analysis and to other norms or values. Next, the paper examines whether European data protection law applies to personalized pricing. Data protection law applies if personal data are processed, and this paper argues that that is generally the case when prices are personalized. Data protection law requires companies to be transparent about the purpose of personal data processing, which implies that they must inform customers if they personalize prices. Subsequently, consumers have to give consent. If enforced, data protection law could thereby play a significant role in mitigating any adverse effects of personalized pricing. It could help to unearth how prevalent personalized pricing is and how people respond to transparency about it.},
	keywords = {behavioural targeting, cookies, Data protection law, frontpage, General Data Protection Regulation, personalized communication, Price discrimination},
}

Online Price Discrimination and Data Protection Law external link

Zuiderveen Borgesius, F.

2015

Abstract

Online shops can offer each website customer a different price – a practice called first degree price discrimination, or personalised pricing. An online shop can recognise a customer, for instance through a cookie, and categorise the customer as a rich or a poor person. The shop could, for instance, charge rich people higher prices. From an economic perspective, there are good arguments in favour of price discrimination. But many regard price discrimination as unfair or manipulative. This paper examines whether European data protection law applies to personalised pricing. Data protection law applies if personal data are processed. This paper argues that personalised pricing generally entails the processing of personal data. Therefore, data protection law generally applies to personalised pricing. That conclusion has several implications. For instance, data protection law requires a company to inform people about the purpose of processing their personal data. A company must inform customers if it personalises prices.

Bibtex

Article{nokey,
	title = {Online Price Discrimination and Data Protection Law},
	author = {Zuiderveen Borgesius, F.},
	url = {http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2652665},
	year = {0901},
	date = {2015-09-01},
	abstract = {Online shops can offer each website customer a different price – a practice called first degree price discrimination, or personalised pricing. An online shop can recognise a customer, for instance through a cookie, and categorise the customer as a rich or a poor person. The shop could, for instance, charge rich people higher prices. From an economic perspective, there are good arguments in favour of price discrimination. But many regard price discrimination as unfair or manipulative. This paper examines whether European data protection law applies to personalised pricing. Data protection law applies if personal data are processed. This paper argues that personalised pricing generally entails the processing of personal data. Therefore, data protection law generally applies to personalised pricing. That conclusion has several implications. For instance, data protection law requires a company to inform people about the purpose of processing their personal data. A company must inform customers if it personalises prices.},
	keywords = {Consumer law, cookies, Data protection law, discrimination, Grondrechten, Personal data, personalised prices, Price discrimination, Privacy, tracking},
}

Keyword: Price discrimination

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