Price discrimination or differential pricing is divided by Pigou C. (1920) in three degrees, namely personalized pricing, versioning and group pricing. Each classification differentiates the pricing between each individual or group of people. From a business perspective this is a highly appealing form of pricing model since businesses can maximize their profits by not only catering to the demands of the average customer. But also by profiting off of customers willing (or out of necessity) to pay a lot more for mostly the same good or service. However, from a consumer’s perspective, the situation sometimes seems less rosy.
Verizon, an American telecom company, throttled the data speeds of California’s firefighters during the California wildfires of this year. The firefighters had a supposedly unlimited data plan, however, the contract stated that speeds were reduced when a certain data threshold was reached. This caused the data speeds to be 0.05% as fast as original, which severely impacted the ability of the firefighters to organize, plan and strategize to combat the fire and evacuate all inhabitants of the area. The only offer when contacting Verizon was to upgrade to a data plan which was twice as expensive in order to lift the throttling.
Delta Airlines jacked up their prices by 600% during hurricane Irma last year when people tried to get out of Florida before the storm hit. Getting to safety cost a couple thousand dollars, which not everyone has to their disposal. The airline explained it as simple supply and demand. Both these cases seem to comply to their industries regulations (Delta) or contract (Verizon). Whether these organisations dealt with these cases morally just is another story.
The two examples above are extreme cases where human lives are at stake. Most people would agree when these companies would be accused of ethical misconduct. Though, there are finer lines price discrimination treads. Would you say something as student or senior discount are unfair since only students or seniors can enjoy them? Would it be fair to someone who can not experience the same benefits? Or would we be going to far down the rabbit hole.
References:
Pigou C. (1920). The economics of welfare, 4th. London: Macnillam
Brodkin, J. (2018). Verizon throttled fire department’s “unlimited” data during Calif. wildfire. [online] Ars Technica. Available at: https://arstechnica.com/tech-policy/2018/08/verizon-throttled-fire-departments-unlimited-data-during-calif-wildfire/ [Accessed 17 Sep. 2018].
Mindock, C. (2018). Airline ticket prices surge up to 600% as Hurricane Irma sparks mass evacuations. [online] The Independent. Available at: https://www.independent.co.uk/news/world/americas/irma-hurricane-flights-florida-tickets-prices-costs-hiked-gouging-delta-united-airlines-a7933471.html [Accessed 17 Sep. 2018].
