Much Ado About Price Discrimination

Online selling technology raises the specter of widespread dynamic pricing, or price discrimination (PD). Articulating a widely held view, Paul Krugman writes, "[D]ynamic pricing is undeniably unfair: some people pay more just because of who they are." Implicit in this view are two claims: (C1) PD is unfair because it violates the equal treatment norm; and (C2) equal treatment of buyers by sellers requires unitary pricing—the same price for one and all. These claims may be thought to underwrite a third: (C3) PD ought to be met with public policy initiatives deterring it. I argue that this view is mistaken: (1) On any reasonable concept of equal treatment, buyers are treated more equally under PD. (2) Although some public policy initiatives aim to deter PD; it is not because PD treats some buyers unfairly with respect to other buyers. (3) Despite emerging online selling technology, PD promises to be ephemeral.