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. 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.

            1. 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.

               1. 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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