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Online Price Discrimination and EU Data Privacy Law

Zuiderveen Borgesius, F.J. & Poort, J. J Consum Policy (2017). DOI: 10.1007/s10603-017-9354-z

20 Pages Posted: 29 Jul 2017  

Frederik J. Zuiderveen Borgesius

University of Amsterdam - IViR Institute for Information Law (IViR)

Joost Poort

University of Amsterdam - Institute for Information Law (IViR)

Date Written: July 26, 2017

Abstract

Online shops could offer each website customer a different price. Such personalised pricing can lead to advanced forms of price discrimination based on individual characteristics of consumers, which may be provided, obtained, or assumed. An online shop can recognise customers, for instance through cookies, and categorise them as price-sensitive or price-insensitive. Subsequently, it can charge (presumed) price-insensitive people higher prices. This paper explores personalised pricing from a legal and an economic perspective. From an economic perspective, there are valid arguments in favour of price discrimination but its effect on total consumer welfare is ambiguous. Irrespectively, many people regard personalised pricing as unfair or manipulative. The paper analyses how this dislike of personalised pricing may be linked to economic analysis, and to other norms or values.

Next, the paper examines whether European data protection law applies to personalised pricing. Data protection law applies if personal data are processed, and this paper argues that that is generally the case when prices are personalised. Data protection law requires companies to be transparent about the purpose of personal data processing, which implies they must inform customers if they personalises prices. Subsequently, consumers have to give consent. If enforced, data protection law could thereby play a significant role in mitigating any adverse effects of personalised pricing. It could help to unearth how prevalent personalised pricing is, and how people respond to transparency about it.

Keywords: price discrimination, cookie, data protection law, General Data Protection Regulation, behavioural targeting, personalised communication

JEL Classification: K12, K00, D10, D11, D20, D30, D40, D60, D70, L00, L11, L20, L51

Suggested Citation

Zuiderveen Borgesius, Frederik J. and Poort, Joost, Online Price Discrimination and EU Data Privacy Law (July 26, 2017). Zuiderveen Borgesius, F.J. & Poort, J. J Consum Policy (2017). DOI: 10.1007/s10603-017-9354-z. Available at SSRN: https://ssrn.com/abstract=3009188

Frederik Zuiderveen Borgesius (Contact Author)

University of Amsterdam - IViR Institute for Information Law (IViR) ( email )

Amsterdam
Netherlands

HOME PAGE: http://www.ivir.nl/employee/zuiderveen-borgesius/

Joost Poort

University of Amsterdam - Institute for Information Law (IViR) ( email )

Rokin 84
Amsterdam, 1012 KX
Netherlands

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