Comment by apparent
4 days ago
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".
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.
> 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.
> 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.
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If you somehow arrange for a redistributive effect. But in practice, the firms are likely to charge each consumer the maximum that consumer can afford. These firms are not engaging in some philanthropic process here.
If you want redistribution, implement a wealth tax.
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>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.
Not necessarily. Look at airlines for example, which make heavy use of price discrimination. This allows them to offer a lower economy price to people who have less money, while subsidizing the flight by charging a higher price to business or luxury travelers.
If they were only allowed to offer one type of ticket at one price, it would mostly benefit richer passengers while pricing the poorest passengers out of air travel.
Stores already have that in the form of having cheaper and more expensive products in the same category (for example, 5 different brands of tomato sauce).
The practice that needs to be outlawed is invisible and per customer pricing. It would be the airline for the same class of seat charging different amounts because, for example, their profile of the flier shows they recently searched for "casket" and so they are likely heading to a family funeral.
It would be as if the airline for their economy class offered the flight for $1000 if you don't play, $600 to attract customers into buying, and $800 if they find their customer is desperate. All for the same seat.
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Nobody is saying you can’t have different classes of service or product offerings. But if I’m buying a banana or you’re buying it, it’s the still a banana.
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There's no subsidizing in your described arrangement unless people who have less money get it below cost.
> If they were only allowed to offer one type of ticket at one price, it would mostly benefit richer passengers while pricing the poorest passengers out of air travel.
I'm sold, how do we put this in the Constitution?
In the end this made news about how the surveillance economy works and should further freak people out about it. This helps long term I think.
I have a club card account with a fake name on it. While they may track the purchase I make and know that a single person made them all, it's not attached to anything that is linked to me. My understanding is that they can't link credit card numbers to purchases, they can only use the number to run the transaction.
It's not great they track purchasing, but if it's not linked to me I don't really care that much.
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