European Union lawmakers are backing calls for new rules around the use of dynamic pricing for online sales, after Oasis fans complained
Ticketmaster became a target of controversy over its use of dynamic pricing in selling ticket for the 1990s Britpop band Oasis ’s long-awaited reunion tour across Britain and Ireland. David Jones is a director at Cambridge Economic Policy Associates, a fellow-in-residence at the C.D. Howe Institute and an associate at the Canadian Centre for Health Economics.
If a good or service is in short supply, allowing the price to rise can naturally identify who wants it the most, similar to an auction. It narrows the field of buyers to those who offer the highest prices and have the greatest willingness to pay, albeit there may be an equity trade-off, as rising prices are less of a disincentive for high-income households and wealthy corporations.
And we should keep in mind that dynamic prices don’t always go up – they sometimes fall. If you’ve ever bought food with a half-price sticker at the supermarket, you’ve benefited from dynamic pricing. Much of the unfavourable sentiment surrounding dynamic pricing is because many people only associate it with higher prices.
Our instinctive outrage toward dynamic pricing requires a sense check. Is dynamic pricing a vehicle for corporations seeking to increase their profits? Almost certainly, but this is by no means exclusive to dynamic pricing: Firms often set high prices without those prices being dynamic.First, it wasn’t clearly communicated that dynamic pricing was in use. There is a whiff of sneakiness that customers don’t like.
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