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The Ethics of Price Discrimination

Published online by Cambridge University Press:  20 July 2015

Juan M. Elegido
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Abstract:

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Price discrimination is the practice of charging different customers different prices for the same product. Many people consider price discrimination unfair, but economists argue that in many cases price discrimination is more likely to lead to greater welfare than is the uniform pricing alternative—sometimes for every party in the transaction. This article shows i) that there are many situations in which it is necessary to engage in differential pricing in order to make the provision of a product possible; and ii) that in many such situations, the seller does not obtain an above-average rate of return. It concludes that price discrimination is not inherently unfair. The article also contends that even when conditions i) and/or ii) do not obtain, price discrimination is not necessarily unethical. In itself, the fact that some people get an even better deal than do others does not entail that the latter are wronged.

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Type
Articles
Information
Business Ethics Quarterly , Volume 21 , Issue 4 , October 2011 , pp. 633 - 660
Copyright
Copyright © Society for Business Ethics 2011

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