Price Discrimination: Toward an Ethical Framework

Abstract

INTRODUCTION|If pollsters set out to identify ethical issues receiving the most attention from business leaders today, price discrimination would probably rank far behind sexual harassment, securities manipulation, banking fraud, drug testing, or a number of other current topics. Yet price discrimination has ethical dimensions that deserve to be explored. First, price discrimination is a common practice; and hence it may too easily be considered justified on that account. Second, business people may simply accept the legal parameters on competition as sufficient to settle the ethical question. Third, price discrimination can either increase or decrease what economists call social welfare. Fourth, the very word "discrimination" suggests some lack of fairness or equity, which may or may not be the case...