RE: "Dynamic Pricing"

[Erik Burns]

this is an interesting move from Amazon, if true. The difference with the temperature sensitive Coke machine is that the price rises for everyone for external reasons. with the Amazon move described here, the discriminatory pricing is based on individual characteristics and is therefore actually discriminatory. (the temp sensitive Coke machine is reacting to supply and demand (higher temps, more demand, higher prices) while the point-of-purchase price differences do not.   something that has always intrigued me about Amazon (being a regular client) is how they offer almost nothing for loyalty or regular use. i guess i was expecting something in the way of discounting or gift certificates or something. maybe i just don't spend enough there, but it does seem a bit strange they don't focus more on keeping customers with a solid record of purchasing. (i spend about $100 a month at Amazon).   etb   -----Original Message----- From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED]]On Behalf Of Seiji Steimetz Sent: Thursday, September 14, 2000 12:13 AM To: [EMAIL PROTECTED] Subject: "Dynamic Pricing" It looks like (3rd degree) price discrimination is becoming more sophisticated.  Check out the following article:   http://dailynews.yahoo.com/h/zd/20000911/tc/behind_amazon_s_preferential_pricing_1.html   According to the article, Amazon.com uses various gauges of your "price sensitivity" (read: own-price elasticity of demand), such as which browser you're using, to determine what price to charge you for DVD's.  It also discusses Coca-Cola's investigation into vending machines that can automatically adjust prices according to outside temperature.   I think most economists will think this is pretty cool.  However, I doubt that the public response to such practices will be favorable.  This leads me to wonder about one legal ramification.  From what I understand, price discrimination is de jure illegal (but not de facto illegal) if it interferes with competition.  Will price discriminating Coke machines impede or promote competition?   Seiji ___________________________________________________ Seiji Steimetz                               Office:  Social Science Tower 305 Compulsory Union Fee Paying Graduate Student University of California, Irvine     Email:   [EMAIL PROTECTED]      Department of Economics          Web:    http://zotnet.net/~steimetz     3151 Social Science Plaza        Office:  (949) 824-1372 Irvine, CA 92697-5100   "Every time a calf is born, the per capita GDP of a nation rises.  Every time a human baby is born, the per capita GDP falls."   -- Julian Simon ___________________________________________________