2025 – The Economics of Price Personalization
with João Ricardo Costa-Filho and Luís Martinez, in The Cambridge Handbook of Algorithmic Price Personalization and the Law (eds Frabrizio Esposito and Mateusz Grochowski).
Book abstract: In the current digital era, the growth of digital commerce and the data-driven economy has created new opportunities for firms to predict consumer behavior, including their willingness to pay a certain price. This practice of algorithmic pricing has become a widespread business model, raising concerns among economists and lawyers about its impact on the market and society. The Cambridge Handbook of Algorithmic Price Personalization and the Law is a comprehensive overview of the key debates surrounding algorithmic pricing, written by a multidisciplinary group of scholars with expertise in legal, economic, data science, and marketing research. The Handbook critically examines existing knowledge, identifies weaknesses, and proposes feasible alternatives for legal analysis, market regulation, and protection of vulnerable individuals. This comprehensive overview of algorithmic pricing is a one-stop reference for the political and legal community.
Chapter Abstract: What’s the price of your product? In the past, one would probably assume that by your we mean the product you are selling. With the advent of massive information regarding prospective consumers, we are approaching an era in which your is more likely to stand for the product you are buying. Firms want to maximize profits, and if they are constrained to charge a single price for every potential consumer, they might leave money on the table. However, if a customer reveals her willingness to pay (the key concept in this chapter), sellers may charge different prices to different people for the same goods or services. How do people reveal their willingness to pay? By making choices and disclosing their characteristics. Information gathering and processing are crucial.
Reviews:
‘The Cambridge Handbook of Algorithmic Price Personalization and the Law is a timely and insightful resource that brings together leading expert perspectives on one of the most pressing regulatory challenges in the current digital marketplace – personalized pricing. This multidisciplinary guide is essential reading for understanding and addressing the complexities of algorithm-driven economic practices.’ Florencia Marotta-Wurgler – Boxer Family Professor of Law, New York University School of Law
‘This book is highly topical. It covers fundamental questions of price personalization as well as an in-depth analysis of EU law and other legal systems. A must-read for academics and legislators likewise.’
Peter Rott – Professor of Civil Law, Commercial and Business Law, and Information Law, Carl von Ossietzky University Oldenburg
‘This handbook on algorithmic price discrimination is a must-read for anyone interested in the historical background (‘old wine in new bottles’), the economic implications (efficiency and distribution), the political move to regulation (world-wide legislative initiatives), and the legal questions (fairness and transparency). It offers deep insights and wide-ranging perspectives.’
Hans-Wolfgang Micklitz – European University Institute in Florence
‘The Cambridge Handbook of Algorithmic Price Personalization and the Law is a truly indispensable collection on personalized pricing. The editors have assembled a stellar set of contributors researching the cutting edge of this critically important phenomenon. Beginning with a technical, economic, and ethical overview, the collection offers strikingly cosmopolitan perspectives on the regulatory landscape. A remarkable contribution to the law and technology field, I expect this handbook to be frequently read and referenced by scholars and policymakers concerned with the law of pricing.’
Frank Pasquale – Professor of Law, Cornell Law School and Cornell Tech