Sunday, February 25, 2007

IT to allow price discrimination?

Here is a nice article about the future of price discrimination using IT and related privacy issues. There are a few ideas about how businesses can get away charging different prices based on customer willingness to pay. One idea is to charge the same cash price, while throwing in different perks, based on customer information, such as frequent flyer miles: this has the effect of hiding the discrimination in the less visible flyer miles thereby preserving customer loyalty.

My guess is that if these practices become wide spread we will see them quickly banned. The language used makes this almost ineivitable. "Discrimination" has a neutral connotation in economics-- not so for customers or politicians.

1 comment:

JI said...

I think John has a great point here. Not only is public outcry going to be significant, it will likely give rise to competitive technologies that work around it. See Trader Joes which promotes that it doesn't have membership cards or sales, just everyday lower prices on higher quality products(and they do).