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Comment by dorgo | Hacker News Reader

Why is price discrimination bad? It is about charging the highest price the customer is still ok with. Sure, if a merchant knows how badly you want his product he can increase the price. But, on the other hand, he will decrease the price for somebody who wouldn't pay the high price.

It's like bargaining on a fair. A method to determine a price suitable for both sides - instead of charging every customer the same price.

And it's not (only) about how much money the customer has. A rich customer can still be price sensitive and would get a low price based on price discrimination.

Also, in my opinion, ads and tracking are (mostly) orthogonal concepts. A website can track or show ads or both or do nothing. Tracking is often used for ads but not exclusively so.

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Sometimes price discrimination may be overall good, but it easily leads to price gouging and I believe there a laws against it, for a good reason.

Should I pay 1.2x, 3x or 100x as much today, just because you know I desperately need the product/service today vs. yesterday?

What happens when I get (wrongly) classified as rich and now can't afford a normal life?

Should medication cost <som of your savings> if it is for life threatening issues? Should basic necessities cost more because my house burned down/got robbed/lost my luggage/whatever and you know I have money?

The argument against that is that if sellers cannot increase prices in times of crisis they have no incentive to stockpile for such events. This leads to shortages and even higher prices on an unregulated black-market.

I'm not saying that I buy this line of reasoning, but there's the counter-argument.

It's not really an applicable argument here. That's a general time/availability/word situation discrimination, which I think I would be ok with, to a limited degree.

I was arguing against people based discrimination, without any meaningful relevance on availability. Again, I think reasonable and reasonably qualified discounts are ok, but not increasing prices for the same product and service.

At best, price discrimination is a waste of time and resources. The buyer loses as much as the seller gains, making it a zero-sum game. But since price discrimination requires more effort than setting a single fixed price, the sum is actually negative.

Aside from that, "charging the highest price the customer is still ok with" means to eliminate the consumer surplus. Which is bad for consumers, i.e. everyone.

And aren't prices supposed to be signals? How are customers supposed to compare the costs of each good if you don't tell them? All you tell them is how much they're willing to spend.

They already know that. But you (probably) don't. If you did, congratulations: you've solved the economic calculation problem. This should raise red flags.

> But, on the other hand, he will decrease the price for somebody who wouldn't pay the high price.

I highly doubt that they would actually decrease the price. They maybe wouldnt increase it, but unlike the bargaining on a fair, the seller can not see that the prospective buyer is really struggling to make ends meet, and sell it at a loss to help them out.

Isn't charging different prices for the exact same product online -- i.e. price testing -- illegal, at least in California?

I'm interested how this works. Car dealerships do this all the time in person. I wonder why they can do it, but websites can't.

They don’t normally decrease the price below what the original baseline was. Would be nice if they did, but that’s not how it appears to be used by today’s companies

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