Detecting price and search discrimination on the internet

Abstract

Price discrimination, setting the price of a given product for each customer individually according to his valuation for it, can benefit from extensive information collected online on the customers and thus contribute to the profitability of e-commerce services. Another way to discriminate among customers with different willingness to pay is to steer them towards different sets of products when they search within a product category (i.e., search discrimination). Our main contribution in this paper is to empirically demonstrate the existence of signs of both price and search discrimination on the Internet, and to uncover the information vectors used to facilitate them. Supported by our findings, we outline the design of a large-scale, distributed watchdog system that allows users to detect discriminatory practices.

The Economics of Privacy

“…Valentino-Devries, Singer-Vine, and Soltani (2012) suggest that certain online retailers may be engaging in dynamic pricing based on their ability to estimate visitors' locations, and, specifically, the (online) visitor's physical distance from a rival brick-and-mortar store. Mikians et al (2012Mikians et al ( , 2013 find suggestive evidence of price discrimination based on information collected online about consumers, as well as evidence of "search discrimination" (steering consumers towards different sets of products with different prices, following their searches for a certain product category). In particular, Mikians et al (2013) suggest price differences of 10 percent to 30 percent for identical products based on the location and the characteristics (for instance, browser configurations) of different online visitors.…”

Big Data and Competition Policy: Market Power, Personalised Pricing and Advertising

“…114 See https://en.wikipedia.org/wiki/Amazon.com_controversies#Differential_pricing. 115 See also Mikians et al (2012Mikians et al ( , 2013 who systematically collected data on various retailers and provide some empirical evidence of search discrimination. 170216_CERRE_CompData_FinalReport 42/61…”

Consumer flexibility, data quality and location choice

“…Precisely, in equilibrium all consumers on segments m 2 buy from their preferred …rms and on segment m = 1 one third of the more ‡exible consumers switches to the less preferred …rm. 9 However, the equilibrium prices of a …rm on its turf depend also on whether a consumer is located between the two …rms or in its hinterland.…”

“…6 In electronic commerce there is evidence of both discrimination based on consumer locations and ‡exibility. Mikians et al (2012) …nd that some sellers returned di¤erent prices to consumers depending on whether a consumer accessed a seller's website directly or through price aggregators and discount sites (like nextag.com). Those price di¤erences can be explained through di¤erences in price sensitivity ( ‡exibility) of the two types of consumers.…”