Thread

1. 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.

         1. 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.

            1. 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?

               1. 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.

                  1. 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).

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