Socialize More, Pay Less: Randomized Field Experiments on Social Pricing

We propose social pricing, a novel pricing framework under which consumers with higher social capital enjoy a better price. Conceptually, social pricing enables firms to achieve price discrimination based on a consumer’s social value. This is in sharp contrast with traditional price discrimination strategies where price differentiation typically hinges on consumers’ personal value. We design and conduct two randomized field experiments on a leading online fresh food retailer to understand the value of social pricing. Social pricing has been commonly credited for its effectiveness in new customer acquisition. Interestingly, our study reveals that it is also highly effective on existing consumers. Our analysis shows that social pricing can increase an online retailer’s profit by 40% solely from existing consumers, compared with regular firm-offered discounts. Exploration of the underlying mechanisms reveals that perceived engagement and social cost are the main drivers, which not only help to increase purchasing frequency but also induce higher order value per purchase. In a follow-up experiment, we vary the rules of social interactions by requiring heterogeneity in consumers’ purchasing frequencies. The results suggest that a heterogeneity-based strategy can further amplify the benefits of social pricing.

Can differences in publisher size account for the relatively low prices of the journals available to master’s universities through commercial publishers’ databases? The importance of price discrimination and substitution effects

Using price quotes and invoices for thousands of full-text databases and single-journal subscriptions, this study confirms that for a typical master’s university, the journals acquired through commercial publishers’ databases cost substantially less than those acquired through the databases of scholarly societies, universities, and other nonprofits. Moreover, the lower prices of commercial publishers’ journals cannot be readily attributed to publisher size (number of journals published) or to any of several other explanatory variables. There is a weak, direct association between publisher size and price among the for-profit journals but a stronger, inverse relationship between publisher size and price among the nonprofit journals. These findings, along with the results of previous research, suggest that resource providers may have incentives to keep prices low due to the collection development strategies adopted by many teaching-oriented colleges and universities. If the library’s goal is to hold a sufficient number of high-quality journals rather than to provide immediate access to every wanted journal, particular journals and databases may be regarded as substitutes even when each product provides unique content. Many U.S. bachelor’s and master’s institutions have goals different from those of the major research universities, and commercial publishers (along with some of the larger nonprofits) seem to recognize this when setting and negotiating prices.

PRICE DISCRIMINATION IN A FORM OF DISCOUNTS: CATEGORIZATION AND IMPACT ON COMPETITION

This paper is aimed to clarify the definition and categorization of discounts as well as pro- and anticompetitive effects of discounts. The author applied qualitative methods to the research. The modern literature review unfolds the gap of proper discounts definition, which is proposed to be covered by five-dimensions approach to discounts categorization. Based on such aspects of discount scheme as time, product, threshold, distribution level and customer, the approach provides comprehensive and uniform characteristics of discount. It allows assessing effects of competition, which are classified in two groups. Pro-competitive effects include stimulation of demand, decreasing cost due to economy of scale, solving coordination problems within a supply chain. Anti-competitive effects encompass predation scheme, raising rival’s cost, exclusive dealing, leverage and exclusionary bundling. The importance of correct assessment of the discounts by antitrust authorities is high as an overenforcement in this sphere may lead to adverse effect on total welfare.

STRATEGI ALTERNATIF PENETAPAN HARGA DENGAN PENDEKATAN DISKRIMINASI HARGA UNTUK MENINGKATKAN VOLUME PENJUALAN CAFÉ SEMANIS KAMU

This research was conducted at Café Semanis Kamu which aims to find out the right alternative strategy used to increase sales volume. This research was conducted with a descriptive qualitative method with sources of information obtained by interviews and literature study. The data analysis method uses an approach Internal Resources Based Analysis, VRIN Analysis (Valuable, Rare, Imitability, Non-Substitution), Sustainable Competitive Advantage (SCA) Analysis, and TOWS (Threats, Opportunities, Weakness, Strengths) Analysis. The results of data processing with this approach formed a price discrimination strategy with two program proposals, namely making package & reservation catalogs, and making special discounts.

On the degree of distortions under second-degree price discrimination

This paper highlights the limitations and applicability of results developed by Chao & Nahata (2015) for nonlinear pricing. Although Chao and Nahata appear to provide necessary and sufficient conditions for general utility functions, we show that one of their results leads only to a restatement of two constraints, and another result may not be valid when consumers can freely dispose of the good. Their model allows for the possibility that higher quantities will have a lower price than smaller quantities. We provide conditions under free disposal that preclude this anomaly. Our analysis suggests that further research on violations of the single-crossing condition should be encouraged.

THE DEFENSE OF PRICE DISCRIMINATION IN NETWORK AND INFORMATION GOODS MARKETS

It is not uncommon that articles focused on consumer-price interaction in the network and information goods market swiftly condemn price discrimination as an obfuscation, on-purpose price complexity, or market failure. The reason is a general neoclassical rule of an efficient market where prices are set at marginal cost with no price discrimination. However, the matter is more complicated. This review provides authors an overview of why, where, and which type of price discrimination should be viewed by different optics. Goods such as software, cell carrier services, electronic newspapers subscription, electric energy supply, payment accounts, books, copyrighted content streaming, etc, cannot be treated like manufactured goods. The reasons are specific conditions – substantial and/or repeated fixed/sunk cost, economies of scale, and demand heterogeneity. Recognized economist W. J. Baumol described marginal cost set prices under these conditions as an ‘economic suicide’. Reviewed articles showed that firms are forced to adopt price discrimination in order to recover their costs and to serve more consumer segments. Reviewed authors provided facts to support the use of multipart tariffs, dynamic pricing, versioning, bundling, and Ramsey pricing. These conclusions are used for suggestions on how several studies of information and network goods should be modified. Modifications are related mostly to model assumptions and pricing conclusions. I argue that, in the case of information and network goods, there is justified price discrimination. Hence, there is a certain justified level of price complexity that has to be accepted and not taken as automated evidence of inefficiency, market power, and consumer exploitation.