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Untangling Price-Discrimination And Personalized Prices Effects: A Revisit Of Efficiency And Harm Presumptions

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In this paper, I revisit the effects of price personalization in an attempt to uncouple them from a mere intensification and continuity of price-discrimination, and by doing so, I aim to refresh the discourse surrounding the engineering of the proper legal rule. Building on the OECD 2018 secretariat background note “Personalised Pricing in the Digital Era,” which illustrates the predominant view on personalized prices, this article highlights the fundamental misconceptions. It overlooks elements that change the practice’s expected effects – including effects on allocative and distributive efficiencies and enforcement costs. I explore three common mistakes that impact our legal rules. The first mistake overestimates allocative efficiencies by postulating market characteristics – mainly limits to arbitrage –as static instead of dynamic. The second underestimates the wealth extraction occasioned by supposing a personalized price as a continuity to low-level price discrimination. The last mistake overlooks the complexity of enforcement and misunderstanding the extent to which personalized prices renders the regulation of exclusionary practices unworkable.