Privacy, Economics, and Price Discrimination on the Internet

by Andrew Odlyzko

I find this a stimulating paper. I have always found Odlyzko’s papers insightful with ideas that are new to me or go beyond what I have thought about. I usually have nits to pick as well.

“On the other hand, price discrimination often arouses strong opposition from the public.” I quibble—‘opposition from those discriminated against’. If “the public” refers to people expressing opinions on regulatory policy, I agree with Odlyzko.

“The requirement that passengers show government-issued identification cards before boarding, another privacy-eroding measure, plays a key role in making this effective.” I don’t know what the law is but the purpose of the law would be served it tickets were transferable with a remaining requirement of notification, perhaps ahead of time, of the person traveling. My notes on price discrimination.

“It is easier and more productive to just charge more to those able to pay more, if one can.” “More productive” for whom? In my pointer above I noted that the class discriminated against may benefit indirectly. If two companies, one large and one small jointly sponsor research that benefits both, the larger may pay more and benefit in the transaction if the alternative is no research.

So far Odlyzko has not mentioned competition among suppliers which works against discrimination. He mentions competition in text beginning “More competition has been regarded” but goes on to say mysteriously that it often fails. Later he refers to this paper on the subject.