Wholesale Price Discrimination in Global Sourcing: Field Evidence from Alibaba

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See all articles by Ruomeng Cui

Ruomeng Cui

Goizueta Business School, Emory University

Jinyun Li

affiliation not provided to SSRN

Meng Li

Rutgers, The State University of New Jersey - Management

Lili Yu

University of Science and Technology of China

Date Written: November 26, 2018

Abstract

Past research has found price discrimination in business-to-consumer (B2C) markets, where buyers are end customers. There is limited study on suppliers' price-quoting behaviors and price discrimination in business-to-business (B2B) markets. It is unclear whether certain characteristics of B2B buyers, who are often representatives of firms and not end customers, would influence suppliers' pricing decisions. In this research, we investigate whether wholesale price discrimination exists, by conducting randomized field experiments on Alibaba.com, the world's largest online global-trade platform. We find that there is no significant difference in the wholesale prices quoted to buyers selling in US and South African markets. We also find that suppliers quote significantly higher wholesale prices to White buyers than to Asian and Black buyers regardless of country. However, price discrimination disappears when buyers present market information to suppliers, providing the lowest wholesale price offered by other suppliers in the market, whereas price discrimination remains when buyers present social information to suppliers, indicating the buyer is recommended by a previous customer. We also find that market information can help buyers obtain a lower wholesale price because it signals a lower willingness to pay. Social information, however, can reduce price quotes for only black and white buyers, but not for Asian (particularly Chinese) buyers, possibly due to distrust between Chinese sellers and buyers.

Keywords: Price Discrimination, B2B Marketplace, Global Supply Chain, Market Information, Social Information

Suggested Citation

Cui, Ruomeng and Li, Jinyun and Li, Meng and Yu, Lili, Wholesale Price Discrimination in Global Sourcing: Field Evidence from Alibaba (November 26, 2018). Available at SSRN: https://ssrn.com/abstract=

Ruomeng Cui (Contact Author)

Goizueta Business School, Emory University ( email )

1300 Clifton Road
Atlanta, GA 30322
United States

HOME PAGE: http://www.ruomengcui.com

Jinyun Li

affiliation not provided to SSRN

Meng Li

Rutgers, The State University of New Jersey - Management ( email )

United States

Lili Yu

University of Science and Technology of China ( email )

Hefei, Anhui
China

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