Big data "kills familiarity" to make implicit price discrimination explicit
Nie Huihua
In recent years, the problem of "killing cooked" big data has been attracting public attention.
Some companies use big data containing personal information to "kill familiarity" to price different groups differently and implement "price discrimination", which makes consumers very disgusted.
For example, at the same time and place, a user with an iPhone might receive a slightly higher offer than a user with another brand of phone when booking a hotel.
Some Internet companies have been pushed to the forefront of the user's big data.
Is it reasonable to use big data as a means of price discrimination?
First, legally speaking, price discrimination itself is not illegal.
Merchants set different prices for different users, which is a legal pricing behavior.
Consumers don't need to worry about overpricing by merchants, because as long as there is market competition, merchants' profits will tend to be equalized.
Conversely, if merchants dump low prices, they will be squeezed out of the competition, which can avoid malicious low prices.
Therefore, maintaining fair competition is the key to optimizing the business environment and protecting the rights and interests of consumers.
Second, from an economic point of view, price discrimination does not necessarily harm the overall interests of consumers.
For merchants, they set different prices during peak hours and low-peak hours, or for customers with different demand elasticity, which is conducive to the implementation of flexible supply and flexible labor, and reduces operating costs.
For consumers, price discrimination reduces the consumption expenditure of some people with lower willingness to pay, but at the same time appropriately increases the consumption expenditure of other people with higher willingness to pay.
Since the latter is relatively insensitive to expenditure, price discrimination at least increases the consumer surplus of the former.
For example, when we watch a movie, we will find that the ticket price is more expensive on Friday and weekend, and the ticket price is very low from Monday to Thursday. This is price discrimination.
Because of price discrimination, consumers with flexible schedules can enjoy lower preferential prices when they go to the movies from Monday to Thursday, thus saving their own consumption expenses, and reducing the degree of crowding and reducing the weekend. negative externalities.
It can be seen that price discrimination based on pricing at different time periods not only reduces the production cost of merchants, but also reduces part of the expenditure of consumers, but also brings positive externalities to the society, which is a win-win result.
Of course, not all price discrimination leads to multiple wins.
For example, if a monopoly conducts first-degree price discrimination against consumers, that is, charging the consumer's reserve price for each unit of goods, it will lead to the complete conversion of consumer surplus into producer surplus.
At this time, price discrimination actually transfers the interests of consumers to producers, but does not harm social welfare.
However, such first-degree price discrimination is hardly sustainable in reality.
Because as long as there is market competition, the monopoly power of merchants will be eliminated.
Therefore, the key to safeguarding the rights and interests of consumers is to introduce competition and break monopoly.
It is not price discrimination that needs to be fought, but price gouging.
For example, some consumers spend money on a merchant's VIP membership, thinking that they can get a better price, but did not expect the final price to be more expensive.
This situation is not price discrimination, but deceptive behavior under asymmetric information.
When launching membership qualifications, merchants should clarify the preferential treatment enjoyed by members.
Consumers cannot accept big data, which is more of an emotional expression and has nothing to do with economic benefits.
In fact, it is difficult for consumers to find out that there is a violation of big data killing by businesses, because there is no essential difference between big data killing and ordinary price discrimination, but the means are different.
In the past, merchants could only roughly divide the crowd and then decide to charge different prices to different consumers.
Now that businesses have big data, they know directly that you have money or not.
Big data is nothing more than making explicit the implicit price discrimination in the past.
In short, big data killing or price discrimination itself is not illegal, it is a ubiquitous marketing strategy.
To protect the rights and interests of consumers and maintain market order, the key is to protect fair competition and optimize the business environment.
(The author is a distinguished professor at the School of Economics, Renmin University of China)