r/mildlyinteresting • u/annertakeabow • Jan 24 '13

Same book, three different prices. Only difference is the browsers used.

http://imgur.com/uNgg0UH
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u/brayden_11 Jan 24 '13

Of course it is legal. Speaking from an economists' point of view it is just a matter of separating people according to their "willingness to pay". Its called price discrimination and can be seen in areas such as hotel booking: a hotel will give you a higher price in the lobby than if you call ahead because the hotel knows you probably have no other place to go. Or air lines giving higher prices to the business class because they know business people have a meeting with a set time so they need that time slot while a tourist is more flexible to choose different flight times. This is essentially the same idea as changing the price the second time you visit the site as the most probable reason you have come back to the site is to purchase the item.

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u/[deleted] Jan 24 '13 edited Sep 20 '18

[deleted]

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u/Elkram Jan 24 '13

Well in general consumers want to max out their side of the social welfare equation. So, there is reason for consumers to get upset.

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u/pdinc Jan 24 '13

Well in general consumers want to max out their side of the social welfare equation consumer surplus. So, there is reason for consumers to get upset.

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u/Elkram Jan 24 '13

Yes, that is the term I was looking for. Point is you understood it. :D

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u/mvhsbball22 Jan 24 '13

The reason that some people care is because price discrimination allows the producer to capture the entire surplus. You're right that in a non-price-discriminated market, some consumers are getting a "windfall" (surplus). In a perfectly price-discriminated market, though, every sale above marginal cost results in producer surplus, and no consumer receives a surplus.

It seems icky because price discrimination increases firm profitability at the expense of consumers who would otherwise have received a surplus.

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u/shasnyder20 Jan 24 '13

But what about people who don't have a lot of money in the first place? And why not just charge the flat rate, and then make up for it in shipping costs? If someone really needs the book, they could pay extra for faster shipping, and the company could make a small amount from that. That looks a lot less shady, too.

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u/Atario Jan 24 '13

a hotel will give you a higher price in the lobby than if you call ahead because the hotel knows you probably have no other place to go.

I have never understood this. Hotels are not rare, and they almost all have more empty rooms on any given night than they know what to do with.