Thomas P. Gehrig and Rune Stenbacka
5.7 Concluding comments
In the digital economy price discrimination will be an increasingly widespread business practice. Price discrimination is intimately related to the collection and analysis of potentially sensitive personal characteristics of consumers, which means that the debate about banning price discrimination cannot be separated from concerns about privacy.
In this contribution we argue that it is difficult to ban price discrimination by reference to fairness considerations. In fact, we argue that most fairness concepts, such as equal market access or equal split of surplus, tend to imply some degree of price discrimination. Essentially, alleged fairness criteria in favour of banning price discrimination seem to be reduced to a simple-minded
“equal-price doctrine”. The issue of banning price discrimination seems to be orthogonal to fairness considerations.
15 For strong arguments along these lines we refer to Kühn (2001).
Typically, price discrimination leads to more intense competition in oligopolistic industries than uniform price schemes. However, price discrimination also enhances the possibilities of coordinated cartels to extract rents from consumers. Hence, on the grounds of consumer welfare we identify a strong complementarity between price discrimination and the effectiveness of antitrust enforcement, which might be particularly relevant for merger control in cases with coordinated-effects mergers. Consumers can be sure to benefit from price discrimination only in countries where they can rely on protection from strong antitrust enforcement with a sufficiently good ability to detect collusion, not only with respect to uniform prices but also with respect to discriminatory schemes. In corrupt or otherwise ineffective antitrust environments a ban on discriminatory pricing serves to limit the transfer of rents from consumers to cartels.
To the extent that consumers fear data misuse of information or simply the complexity of non-linear pricing, uniform pricing limits the diffuse uneasiness about potential risks and, may, thus, seem desirable. However, legislators should also take into account that such arguments can easily play into the hands of industry lobbies interested in uniform pricing rules with the goal of reducing the degree of competition and maintaining industry profitability at the expense of consumers. Even with strong antitrust enforcement and a good ability to detect collusive schemes, a legal form-based ban on price discrimination runs the risk of enhancing industry profits at the expense of consumers.
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