Price Discrimination Research Articles

Price matching in online retail

AbstractWe analyze a sample of consumer‐electronics products sold by the US NewEgg online‐retailer to study the impact of price‐matching guarantees (PMGs) on prices. By applying a difference‐in‐differences approach, we find that the price of the policy‐adopting retailer increases by 4.7% during the policy validity period and up to 5 days after the treatment, while those of the non‐adopting competitor are not affected. Results are mainly driven by highly‐rated, visible, and expensive products, whereas the policy does not affect low‐rated, less visible, and cheaper products. These findings are consistent with the hypotheses that PMGs act as price discrimination or signaling tools.

The Effect of War on Spatial Differentiation of Real Estate Values and Urban Disorder in the Damascus Metropolitan Area

The Syrian war, which commenced in 2011, transformed the Damascus real estate market due to heightened insecurity and tenure disputes. Using the hedonic price models, including 2411 housing transactions over the period 2010–2022, this study aims to understand the spatial dynamics of the real estate market in wartime. Our findings indicate that war variables have had a significant impact on the differentiation of property prices. Notably, property attributes have a more substantial impact on real estate values than district location, with severely damaged buildings in Damascus City resulting in an 89% decline in prices, while prices in Rural Damascus districts have decreased by 50%. Additionally, this study examines the urban texture of Damascus using correlation and homogeneity statistics derived from the gray-level co-occurrence matrix obtained from Google Earth Engine. Our findings show that correlations were highly differentiated, particularly among Rural Damascus districts, with a total decline of 87.2%. While homogeneity values decreased overall between 2015 and 2019, they improved slightly after 2019. This study guides decision makers in mitigating severe property value variations across war-affected urban areas by fostering spatial justice in property rights and promoting balanced investment and sustainable real estate development during the post-war recovery phase.

The Effects of Market Monopolies on Consumer Welfare and Economic Efficiency

Using both theoretical and empirical analysis, this study offers a thorough examination of how market monopolies affect consumer welfare and economic efficiency. The study sheds light on the ways in which monopolistic enterprises sustain their market dominance by analyzing how monopolies function. These tactics include taking advantage of entry hurdles, exercising control over crucial resources, and implementing strategies such as price discrimination. According to the research, because there is no competition, monopolies not only drive up costs but also limit consumer choice, lower the quality of their products, and stifle innovation. Due to these monopolistic actions, there are inefficiencies in the market, especially when it comes to the distribution of resources, which makes businesses less inventive and productive and ultimately contributes to a general stagnation in the economy. The role of legal frameworks like antitrust laws, which are intended to prevent monopolistic behavior, is also evaluated in this research. It criticizes current laws, pointing out that they frequently fail to keep up with changing market circumstances, especially in sectors like technology and telecommunications. In order to remedy these deficiencies, the paper suggests a number of policy measures, such as stepping up antitrust enforcement, lowering obstacles to new businesses entering the market, and liberalizing the market to create an atmosphere that is more competitive. It also promotes updating regulatory frameworks to deal with digital monopolies and quickly evolving global markets in a way that prioritizes consumer welfare and restores economic efficiency. By taking these steps, the study highlights how crucial it is to reduce monopolistic power in order to foster innovation, long-term economic growth, and consumer safety.

The effects of removing gender-based price discrimination on movie demand: Estimates using smartphone location data

Since 2021, an increasing number of movie complex firms in Japan have eliminated long-standing gender-based price discrimination by replacing discounts for only women with discounts for all customers. This study examines the impact of this discount change on movie demand. Using theater-level visit data by gender and a difference-in-differences strategy, I find increased movie demand for both males and females, indicating inter-gender interdependence of movie demand. A profit analysis shows that the average movie theater profit remains at the same level as that before the discount adjustment. Lastly, combining the difference-in-differences estimates with a random utility model reveals that joint movie consumption enhances paired customers' movie-watching utility.

The formation of social groups under status concern

I study the interaction of two forces in the formation of social groups: the preference for high quality peers and the desire for status among one's peers. I examine their equilibrium effects under different market structures and find that status concern reduces the potential for and benefit of sorting - both for a social planner and a monopolist - but the interaction between preference for quality and status can make the exclusion of some agents a second-best outcome. Even in settings with complementarities, price discrimination and screening can be necessary to facilitate sorting and increase welfare. Nevertheless, positional concerns can be beneficial for welfare if they provide sufficient incentive to engage more with one's group and thus increase positive spillovers. In those cases, welfare is higher if individuals have at least some degree of status concern, even if the welfare measure ignores such relative comparisons.

Public firms on an international border: A model of spatial price discrimination

This paper uniquely examines an international mixed oligopoly in a model of spatial price discrimination. It isolates the importance of the location of the border showing a variety of equilibria depending on the nationality and placement of the private rivals. While the presence of a public firm often improves domestic welfare, it need not. Moreover, a prisoner's dilemma can exist in which each country would benefit from the privatization of both public firms but neither country has a unilateral incentive to privatize. The implications are discussed.

Winning Seats: Contingency Selling in Markets with Limited Capacity and Diverse Preferences

This paper examines an emerging pricing model, contingency selling, for markets where the product is sold in advance with attribute uncertainty and capacity constraint. A typical example is tournament ticket sales for sports events where it is uncertain whether a particular team will appear in the game. The model enables the firm to sell tickets in a contingent fashion, i.e., some tickets will be valid only if a certain team gets into the game. When consumers (fans) have sufficiently different preferences for different products (games with different teams), selling these “contingent tickets” better matches the price with the willingness-to-pay of particular consumer segments (fans of specific teams). Exploiting state-based price discrimination and belief heterogeneity, contingent tickets generate a higher margin per seat than the traditional way of selling general tickets, especially when there are supply constraints. We further show that contingency selling continues to be advantageous in the presence of secondary markets where consumers purchase tickets in advance but can trade tickets once they know which team will be in the game. We extend our model to examine the impacts of consumer optimism bias and fan base asymmetry. Finally, we compare contingency selling with alternative selling mechanisms to demonstrate the robustness of our results and illustrate the situations where this new selling model is more (or less) advantageous.

Intraconsumer Price Discrimination with Credit Refund Policies

Consumers often receive a full or partial refund for product returns or service cancellations. Much of the existing literature studies cash refunds, where consumers get the money back minus a fee upon a product return or service cancellation. However, not all refunds are issued in cash. Sometimes consumers receive credit that can be used for future purchases, oftentimes with an expiration term after which the credit is forfeited. We study the optimal design of credit refund policies. Different from models that consider cash refunds, we explicitly model repeated interactions between the seller and consumers over time. We assume that consumers’ valuation for the product/service varies over time and that there is an exogenous probability for product returns. Several interesting results emerge. First, a credit refund policy facilitates intraconsumer price discrimination for a single type of consumers with stochastic valuation. Second, an optimal policy often involves an intermediate credit expiration term, under which a consumer with a high product valuation always makes a purchase, whereas a consumer with a low product valuation may be induced to make a purchase as the credit approaches expiration, leading to a demand induction effect. Finally, a credit refund policy can be more profitable than a cash refund policy and can lead to a win-win outcome for both the firm and consumers under certain conditions. We also consider several extensions to check the robustness of our findings. This paper was accepted by Jeannette Song, operations management. Funding: Y. Liu was substantially supported by a grant from the Research Grants Council of the Hong Kong Special Administrative Region, China (Project No. PolyU15502420). Y. Liu was also supported by a grant from NSFC [72293564/72293560]. Supplemental Material: The data and online appendices are available at https://doi.org/10.1287/mnsc.2020.03042 .

Pink tax: Challenges faced by Indonesian women as consumers of personal care products

The phenomenon of pink tax is a gender inequality issue that discriminates women in the purchase of goods or services by producers. The objective of this research is to identify the pink tax phenomenon in Indonesia, encompassing its existence, influencing factors, and the urgency of the related issue. Additionally, this study aims to analyse the role of the government through policies regarding the emergence of the pink tax phenomenon. Policies closely associated with the pink tax include Law Number 8 of 1999 on Consumer Protection, Law Number 5 of 1999 on the Prohibition of Monopoly Practices and Unfair Business Competition, and Law Number 7 of 2014 on Trade. The research methodology employed in this study is qualitative, involving literature review, documentary analysis, and interviews. The findings of this research indicate that the pink tax exists in Indonesia, yet awareness of this issue is not evenly distributed across all layers of society. While some institutions have acknowledged the existence of this problem, there have been no concrete steps taken to reduce or address this gender-based price discrimination. Furthermore, current policies are deemed inadequate in addressing gender-based price discrimination practices and protect women’s consumer. This is attributed to the fact that gender equality elements are not fully encompassed in the existing policies.

Passenger car market and regional price discriminations for new cars: Case study and empirical analysis for Poland 2004–2021

Abstract Poland disposes on a large stock of mostly aged private passenger cars. In contrast younger cars still play minor role in individual mobility. The contribution analyzes reasons of lagging modernization by focusing on new cars prices with respect to regional price discrimination. It finds in 2004-2021 substantially increasing new cars prices and regional price discrimination between Poland and Germany. Price differentials were positive, with lower prices in Poland, and increased during time. Producers discriminated by prices increasingly but also limited arbitrage transactions by controlling excess differentials. Optimal regional price discrimination could support car markets developments in Poland by stock age compositions shifts towards younger cars. However, applied discrimination proves in observed market environments not sufficient to achieve a great car market transition in near future.

The Pink Tax in Consumer Behavior for Personal Care Products

Pricing significantly influences consumer decisions, with variations often observed for similar products due to purchase timing, market segments, and Gender. This phenomenon, known as price discrimination, can raise ethical concerns, especially when it exacerbates inequalities. A notable example is the "pink tax," where products marketed towards women are priced higher. Despite legislative efforts like California's Gender Tax Repeal Act and similar measures in New York, gender-based pricing disparities persist, particularly in personal care products. This study explores consumer perceptions of pricing fairness in personal care products and the impact of the pink tax on purchasing decisions. The research employs a mixed-methods approach, combining surveys to gather quantitative data and semi-structured interviews for qualitative insights. The surveys measure public awareness and attitudes towards the pink tax, while in-depth interviews with women who frequently purchase personal care products provide an understanding of their experiences. The results are expected to reveal that consumers generally perceive the pink tax as unfair and exploitative, influencing their purchasing behaviour and attitudes towards gender-neutral products. This study will contribute to understanding gender-based pricing and its effects on consumer behaviour in Indonesia, offering insights for promoting fairer pricing practices.

An Evolutionary Game-Based Regulatory Path for Algorithmic Price Discrimination in E-Commerce Platforms

With the advent of big data, the swift advancement of diverse algorithmic technologies has enhanced the transaction efficiency of the e-commerce business. Nevertheless, it is crucial to acknowledge that e-commerce platforms might employ algorithmic technology to enforce differential pricing for various consumers with the aim of maximizing profits, thus infringing upon the lawful rights and interests of consumers. This paper focuses on the algorithmic price discrimination commonly observed on e-commerce platforms. To effectively regulate this behavior, the paper utilizes evolutionary game theory (EGT) to analyze the strategies employed by e-commerce platforms, consumers, and market regulators to achieve stability. This research employs a real-life situation and utilizes parametric simulation to visualize and analyze the process and outcomes of the three-party evolutionary game. The results demonstrate the credibility and feasibility of the article’s findings. Based on our research, we have reached the following findings: During the process of evolution, the strategic decisions made by the game participants from the three parties will mutually impact each other, and various elements exert varying degrees of influence on the strategic choices made by the game participants from each party. Collaborative governance can enable consumers and market regulators to regulate the discriminatory pricing behavior of e-commerce platforms effectively. This article offers valuable insights into the governance of violations in the e-commerce sector based on robust data and model research.

How market structure and market power shape hotel price discrimination – Evidence from big data

Limited research has addressed market structure and market power in the hospitality context. This study builds on the market structure literature by examining how market structure and power relate to and affect hotel properties’ price discrimination. We collected the published room rates of 583 hotels in Houston, Texas, in 2016 hotels.com . These dyadic price data captured booking windows with varied booking and check-in dates. Estimation results revealed two types of price discrimination, intertemporal and restriction-based, in the hotel industry. We confirmed that market structure and market power each played a role in such discrimination, with price discrimination being more intense in a more competitive market and among hotels with less market power. A sub-group analysis of hotels across different classes indicated heterogeneity in our results. Implications are provided for revenue managers and hotel investors to monitor market structure and power to design and manage proper pricing strategies.

Beyond Convenience: Exploring the Hidden Impact of Algorithmic Pricing on Consumer Trust and Loyalty in Chinese Online Travel Agencies

ABSTRACTThe emergence of online travel agencies (OTAs) provides travelers with “one‐stop” convenience, but also faces issues of price discrimination. This mixed‐methods study began with semi‐structured interviews of 30 participants to explore initial perceptions, followed by a survey of 307 Chinese consumers. The study examined attitudes toward OTA overreliance on algorithmic pricing and unclear information, and their impact on trust and loyalty. Findings reveal that during peak seasons, regular customers without value‐added membership services paid higher room rates than new customers. The results indicate that once trust is established through clear information quality and reliable service, consumers are less wary of pricing quotes. The conclusion summarizes the findings and suggests further research to promote transparent and fair pricing practices, enhancing consumer trust and loyalty.

Single rollover or dual rollover: How a monopoly NEV manufacturer responds to NEV credit policy

The NEV credit policy plays a crucial role in advancing the new energy vehicle (NEV) industry and environmental conservation. This study investigates the monopoly NEV manufacturer’s optimal rollover strategy (Single Rollover (SR) vs. Dual Rollover (DR)) and pricing scheme (skimming vs. penetration) under the government’s stricter calculation criteria for NEV credit policy, considering a two-period market with strategic consumers. We find that the NEV manufacturer typically adopts a skimming pricing scheme in DR strategy, while a penetration pricing scheme in SR strategy. The choice between SR and DR strategy hinges on the government’s calculation criteria for NEV credits, product upgrade speed, and vehicle environmental performance improvement. When the calculation criterion for NEV credits is moderate, or when it is low, coupled with fast product upgrade speed and marginal improved environmental performance of the new vehicle, SR strategy is beneficial to the NEV manufacturer to avoid the cannibalization between new and old vehicles. In contrast, the NEV manufacturer can benefit from DR strategy through price discrimination between new and old vehicles to attract consumers from different market segments. However, stricter calculation criteria for NEV credits do not always result in higher social welfare.

Competing buyers’ investment and ordering strategies under supply disruption

Supply chain disruptions can be costly and disruptive, and reducing supplier uncertainty through investments can be an effective strategy for mitigating these risks. In this study, we explore ordering and investment strategies in a downstream competitive environment, considering supply uncertainty. We consider two buyers ordering from a single supplier and competing in a Cournot market. Buyers must balance investment benefits against costs when making investment decisions. We find that without downstream competition, a relatively low investment proportion can yield a “win-win” outcome. Under downstream competition, an increased number of investors does not necessarily lead to higher supplier reliability. When both buyers invest at a high ratio, the significant decline in order quantities may results in lower supplier reliability. When there is only one investing buyer in the market, even though the competitor may benefit from spillover reliability enhancement — free-riding, the buyer may also be willing to provide an investment subsidy to improve the supplier’s reliability. When both buyers invest at a moderate ratio, downstream competition may benefit all supply chain members. Moreover, increasing wholesale price differentiation and endogenous investment ratios can effectively reduce free-riding behavior of the non-investing buyer. These findings have practical implications for supply chain managers aiming to reduce supply risks and allocate investment resources efficiently.

Pengaruh Harga Dan Diferensiasi Produk Terhadap Keputusan Pembelian Pada Rumah Makan Sagala Sunda

The aim of this research is to determine the partial and simultaneous influence of price and product differences on purchasing choices at the Sagala Sunda Restaurant. This research method uses quantitative, which is based on certain groups or samples based on the principles of positivism. The research population consisted of customers who ate at the Sagala Sunda Restaurant, resulting in a sample size of 150 people. Data examination includes instrument analysis to assess validity and reliability, classical assumption tests such as normality tests, heteroscedasticity tests, and multicollinearity tests, hypothesis tests such as t tests and F tests, multiple linear regression analysis, and calculating the coefficient of determination. The findings from this research show that price and product differentiation have a positive and significant effect on purchasing decisions at the Sagala Sunda Restaurant. In addition, it is shown that these two variables together contribute 78.5% of the impact on purchasing decisions.

The role of trademark rights expansion in the formation and abuse of market power

Trademarks play a critical role in the creation and abuse of market power, in the sense that when expansively protected, trademark rights yield legal advantages that can be leveraged to lock in consumers and raise entry barriers. But this role has long been underestimated or even overlooked. Based on empirical research and qualitative case analysis, we find that the legal advantages created by the expansion of trademark rights are a key factor in the formation of firms’ market power in product domains with a high degree of information asymmetry. In situations where firms have market power, the geographical and cross-category expansion of trademark rights can enable and rationalize the implementation of abusive practices such as price discrimination and tying. Limiting the anti-competitive effects of the expansion of trademark rights requires the combined efforts of ex post antitrust and ex ante regulation.

Organizational Responses to Deviant Resale Behaviors Towards Price Discrimination in the Hotel Industry

Organizational Responses to Deviant Resale Behaviors Towards Price Discrimination in the Hotel Industry

The Evolution of Price Discrimination in E-Commerce Platform Trading: A Perspective of Platform Corporate Social Responsibility

The Evolution of Price Discrimination in E-Commerce Platform Trading: A Perspective of Platform Corporate Social Responsibility