Personalised Pricing: The Demise of the Fixed Price?

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.