So called loyalty programs should be illegal on multiple fronts,
- Privacy: There's obvious tracking of purchasing trends. This derails into selling user data to everyone that makes people increasingly easy to track.
- Customer-dependent pricing / Price-discrimination: This is awful for economy, in econ 101 you learn that business want to charge each customer as much as they are willing to pay, but this differentiated pricing is just getting their hands into everyone's pockets.The free market principles rely on perfect knowledge, and every step made to make pricing harder is an attack against self market regulation.
Price discrimination is not a priori bad. A fixed price with enough margin to support the business may be too high for price sensitive consumers. If you can charge more to less price sensitive consumers, you can, at the margin, make a little bit on these price sensitive consumers, and overall everyone is better off - more consumers are satisfied and their marginal willingness to consume a unit of the thing being sold is more equalized.
Yes, this is the reason why it's sort of illegal, but done anyways.
Honestly, beyond paying fewer fees on the bus as a kid, I'm pretty sure I'm being scammed everytime I experience price discrimination.
I feel it's easier to make it illegal and give away reasonable credits to all consumers. I wouldn't discriminate in credits either, I'd rather have public transportation being free for all than claim to save money that society needs to spend anyway.
It doesn't help that lying about the price at any point just makes accounting harder, and creates space for wrong, uncompetitive pricing, or awful deals that would hurt business and society in the longer term anyway.
I don't think everyone is better off, at best the "less price sensitive" is unaffected. But then you have to have have some way of stopping arbitrage via the customers paying the lower price through some sort of identity checks or restrictions. I think that's an unavoidable negative outcome and it's not clear that it would always be outweighed by allowing more people to consume the product.
There are ways to adequately approximate that kind of price discrimination without detailed tracking though, like giving discounts to students, seniors, and people receiving various kinds of welfare benefit upon showing proof of status.
Yeah it isn’t as accurate as the privacy-invasive kind of tracking, since students and seniors can be wealthy and eligibility for welfare benefits doesn’t always consider assets or gifts from well-off family. But it’s accurate enough to give the economy most of the same benefit without the privacy downside.
I do think it’s fine for people to opt in to more tracking as a separate consent choice beyond merely participating in a loyalty program, for example to get more personalized and therefore more useful offers, but not as a condition of participation to merely receive at least standard offers and accumulate points. That’s how they generally work in Germany.
It's the normal term, in that it has been normalized as such. But it is otherwise not accurate except in the barest, most monetaristically self-fulfilling-prophecy way.
So called loyalty programs should be illegal on multiple fronts,
- Privacy: There's obvious tracking of purchasing trends. This derails into selling user data to everyone that makes people increasingly easy to track.
- Customer-dependent pricing / Price-discrimination: This is awful for economy, in econ 101 you learn that business want to charge each customer as much as they are willing to pay, but this differentiated pricing is just getting their hands into everyone's pockets.The free market principles rely on perfect knowledge, and every step made to make pricing harder is an attack against self market regulation.
Price discrimination is illegal even in Lobby-land, https://www.law.cornell.edu/uscode/text/15/13
Price discrimination is not a priori bad. A fixed price with enough margin to support the business may be too high for price sensitive consumers. If you can charge more to less price sensitive consumers, you can, at the margin, make a little bit on these price sensitive consumers, and overall everyone is better off - more consumers are satisfied and their marginal willingness to consume a unit of the thing being sold is more equalized.
Yes, this is the reason why it's sort of illegal, but done anyways.
Honestly, beyond paying fewer fees on the bus as a kid, I'm pretty sure I'm being scammed everytime I experience price discrimination.
I feel it's easier to make it illegal and give away reasonable credits to all consumers. I wouldn't discriminate in credits either, I'd rather have public transportation being free for all than claim to save money that society needs to spend anyway.
It doesn't help that lying about the price at any point just makes accounting harder, and creates space for wrong, uncompetitive pricing, or awful deals that would hurt business and society in the longer term anyway.
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I don't think everyone is better off, at best the "less price sensitive" is unaffected. But then you have to have have some way of stopping arbitrage via the customers paying the lower price through some sort of identity checks or restrictions. I think that's an unavoidable negative outcome and it's not clear that it would always be outweighed by allowing more people to consume the product.
There are ways to adequately approximate that kind of price discrimination without detailed tracking though, like giving discounts to students, seniors, and people receiving various kinds of welfare benefit upon showing proof of status.
Yeah it isn’t as accurate as the privacy-invasive kind of tracking, since students and seniors can be wealthy and eligibility for welfare benefits doesn’t always consider assets or gifts from well-off family. But it’s accurate enough to give the economy most of the same benefit without the privacy downside.
I do think it’s fine for people to opt in to more tracking as a separate consent choice beyond merely participating in a loyalty program, for example to get more personalized and therefore more useful offers, but not as a condition of participation to merely receive at least standard offers and accumulate points. That’s how they generally work in Germany.
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That's just the standard term for such programs https://en.wikipedia.org/wiki/Loyalty_program
It's the normal term, in that it has been normalized as such. But it is otherwise not accurate except in the barest, most monetaristically self-fulfilling-prophecy way.