Saturday, April 9, 2011
Groupon and the ethics of price discrimination
Gabriella sent me the link to a very interesting piece on price discrimination. You can listen the story here. And following this link you can have access to the article. Should producers treat their customers equally? What is wrong with price discrimination?
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It is simple why price discrimination is wrong-why should I pay more for a product than the next customer? For example, say my friend and I purchased a hamburger from the same vendor at different times. If I found out that my friend was charged $3 and I was charged $6 simply because the vendor saw that I showed more interest in the burger, I would be frustrated. It is wrong to rip off people who appear to be more willing/able to pay. If the cost of the production does not change, neither should the selling price.
ReplyDeleteAs for Groupon, I feel as though it is not exactly price discrimination. I actually am an active member on this site and do not feel as though it discriminates in any way when I use my coupons. I go out of my way to do research and find these coupons for products that I am interested in; therefore, I deserve the discounts. If other people do not want to put in the extra effort to find deals and save money, then they cannot complain if they are charged more for a product. If my friend had a coupon for her hamburger and used time and effort to find that coupon, then I would not be frustrated that she paid half the price.
I don't think it's unethical because through price discrimination the seller is maximizing profit and this maximizes total social utility so that ultimately , society as a whole benefits and this is a morally "right" outcome in that everyone as a whole is better off.
ReplyDeleteTo me Groupon is the modern form of price discrimination and is actually more discriminatory than the haggling bit in Monty Python because if you don't have time or don't visit that site or don't own a computer you lose, so overall you lose on more levels than even how rich or poor you are! For example I don't get to pay the reduced rate for the burger because I 1) don't go to Groupon and 2) don't have time to browse a website for random coupons, meaning I get charged MORE even though I might have less income than those people who are using the coupon.
I see it as this: if you are going to complain about the price of something either don't buy it or, like the rest of these price-sensitive people, go on Groupon and find the coupons too. It's not like Groupon is a service available to some people on the internet- it is available to all.
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