The Welfare Effects of Dynamic Pricing: Evidence from Airline Markets
I agree with the paper&#x27;s conclusions. Dynamic pricing is a good thing. But lets take a counterexample:<p>Amazon tried this years ago. They changed pricing on the same sku based on who was shopping for it.<p>The blowback was tremendous. Amazon had to actually back down.<p>My take is that consumers understand and are willing to put up with dynamic pricing for airplane seats because the algorithm is presumably understood.<p>I&#x27;m willing to accept that the person sitting next to me on an airplane may have paid 1&#x2F;3 than the price I paid on my ticket. Maybe the person next to me booked earlier, or booked when the airline had a promo going. Sounds reasonable.<p>But what happens when airlines quietly change algos...to raise prices because of my browsing habits, IP, or CC used?<p>I bet you this is coming