Essay by Patrick K. Lin: “Before the 1870s, retail goods rarely carried fixed prices. Instead, haggling was the norm. Customers and store clerks engaged in a song and dance, testing the other’s economic limits. Then, on the eve of the Philadelphia World’s Fair, businessman John Wanamaker transformed an abandoned railroad station into the Grand Depot, one of the first department stores in the United States. At the grand opening, each item in the sprawling store was affixed with a conspicuous label declaring a non-negotiable price. When millions came to the city for the fair, many had their first encounter with fixed price tags. The elimination of haggling saved both customers and clerks time, making the market significantly more efficient. Fair visitors brought the idea of the price tag home with them. Soon, businesses around the world adopted fixed prices and price transparency.
One hundred and fifty years later, the datafication of the economy is causing the retail experience to regress to a form of variable pricing far more coercive than the haggling of the past. With online shopping, social media, and data collection, modern corporations have access to more information than ever before. Retailers can view your purchase history, location, personal demographics, and much more. This has enabled businesses across a variety of sectors to engage in surveillance pricing—the practice of extracting and exploiting personal information in order to charge customers different prices for the same product or service. Today, variable pricing is back, but this time the seller knows everything about you.
The viability of surveillance pricing—its profitability, ubiquity, and exploitative nature—hinges on the presence of market failures. Severe information asymmetries are perhaps the most insidious. While corporations have access to data brokers, online behavioral advertising, and algorithms that can adjust prices in real time, consumers are more disempowered than ever…(More)”.
