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Seattle City Council votes to ban surveillance pricing in sale of groceries

395 points · 229 comments · ortusdux

apparent · 1790182043 · focus · HN ↗
The devil is really in the details:
> The bill also permits a vast array of discounting practices while requiring increased transparency around discounts and placing some limitations on how consumers can be profiled.
The issue isn't "hey, you gave me a custom price that was disadvantageous". The issue is that "you gave me the regular price for some item but gave discounts to other people". That's trickier to outlaw because the "bad price" is the regular price, not a special discounted price.
If businesses are behaving badly, what they're doing is setting high regular prices and then discounting items that they don't think you'd otherwise buy. For items that you buy all the time, they're giving you minimal or no discounts.
But if you tell them they can't do this profiling, then they'll presumably resort to some mix of (1) no discounts with slightly lower overall pricing or (2) some loss leaders but otherwise regular pricing.
It's not especially clear to me that in the long run this is much better for consumers. They might get slightly more consumer surplus, but I doubt it will make that much of a difference. People in a given area probably have fairly similar buying patterns, plus they can still use loyalty programs, student/senior discounts/etc., as well as traditional coupons, to let customers sort themselves into "I'm generally price conscious" and "my time is worth more than my money".
1. jsrozner · 1790182360 · focus · HN ↗
  It can never be better for consumers. The only way a business would adopt this practice is if it leads to greater revenues. On average, that necessarily means worse prices for the average consumer.
  > But if you tell them they can't do this profiling, then they'll presumably resort to some mix of (1) no discounts with slightly lower overall pricing or (2) some loss leaders but otherwise regular pricing.
  That's not true. Competition with other market participants should in theory (assuming competition) be sufficient. The firms are in general already charging the profit-maximizing price. They could, however, increase profits with more information.
  But there is the additional problem that they will also monetize this information by selling it into advertising markets. The whole point of this business model is to capture previously uncaptured value that would otherwise have been shared in the commons.
  1. astrange · 1790183115 · focus · HN ↗
    > It can never be better for consumers. The only way a business would adopt this practice is if it leads to greater revenues. On average, that necessarily means worse prices for the average consumer.
    That depends on the distribution of consumer incomes. Price discrimination (charging people more who can afford more) can be good for low-income customers.
    jsrozner · 1790184195 · focus · HN ↗
    If you somehow arrange for a redistributive effect. But in practice, the firms are likely to charge each consumer the maximum that consumer can afford. These firms are not engaging in some philanthropic process here.
    If you want redistribution, implement a wealth tax.
    alistairSH · 1790185148 · focus · HN ↗
    Are there any examples of markets where price discrimination is good for the average consumer? Airline travel is the one that pops to mind - first class customers pay well above marginal cost and effectively subsidize the cattle class, right?
    jsrozner · 1790186139 · focus · HN ↗
    In the long run it would be strange for this to be the case, no? What are the economic forces that give rise to this? Maybe sometimes recessions affect poorer people more, and first class tickets smooth out revenues?
    But in the long run, we've seen a steady worsening of the economy experience as airlines have invested in improved first class experiences. In the long run it's simply impossible for a firm to serve poor people (they have no money), absent interventions that allocate buying power to the poor person, or others that force the firm to do so.
    lokar · 1790199246 · focus · HN ↗
    I think the worsening economy class situation is simply consumer choice. Discount carriers offer worse service for a (sometimes minimally) lower price. People pick that, so other airlines do the same (or they would loose customers).
    dh2022 · 1790205280 · focus · HN ↗
    If this was the case and the cattle class would cause airlines to lose money you would definitely see airlines flying smaller planes just for the first class.
    Most likely what happens is that cattle class pays for the plane to fly, and airlines make more from first class.
    gammarator · 1790206561 · focus · HN ↗
    See <a href="https://en.wikipedia.org/wiki/Business_class_airline" rel="nofollow">https://en.wikipedia.org/wiki/Business_class_airline for a small number of examples
    dh2022 · 1790207178 · focus · HN ↗
    Thank you for the link: it proves my point. Most of business-only airlines did not survive, the only two that survived had to add economy class.
    astrange · 1790224917 · focus · HN ↗
    Free to play video games?
    contextfree · 1790214297 · focus · HN ↗
    > the maximum that consumer can afford.
    but isn't that less for consumers who can afford less?
    otterley · 1790203290 · focus · HN ↗
    > Price discrimination (charging people more who can afford more) can be good for low-income customers.
    Unfortunately it doesn't work out that way. Consider banks, for example. As a relatively wealthy person, I don't pay fees for practically anything. On the contrary, banks pay me in the form of new-account signup bonuses, interest-bearing checking accounts, ATM fee reimbursements, etc.
    Poorer bank customers, on the other hand, are continuously getting nickeled-and-dimed by banks in the form of monthly account fees, foreign ATM fees, NSF charges, etc.
    fwip · 1790204393 · focus · HN ↗
    Likewise, poorer customers are less able to avoid this kind of price discrimination at the grocery store.
    If you walk or take the bus to the grocery store, you have fewer grocery stores to shop around for a deal at. If you're living paycheck to paycheck, you're less able to stock up on, say, cold medicine, when you see a good deal (and more likely to pay the "we know you're sick" price). And if you're time-poor (because you're working two jobs, and neither are the kind you can browse the Internet at while your code is compiling), you're less able to do comparison shopping, or notice that the price of what you need is always more expensive than when you don't.
    apparent · 1790214567 · focus · HN ↗
    Yeah, but you're probably 'paying' them in the form of cash deposits that earn nothing, but which they lend out for a few percent.
    otterley · 1790217801 · focus · HN ↗
    Yes, you’ve described the business model of banks. Have a lollipop. :-)
    (Mine pays me about 3% APR which isn’t nothing.)

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