Price discrimination by language: Field experimental evidence from a shopping mall

Jungmin Lee and Sangkon Park

International Journal of Industrial Organization, 2019, vol. 63, issue C, 69-98

Abstract: To investigate whether foreign shoppers are discriminated against, we conduct a field experiment at a large shopping mall. We employ 56 female foreigners speaking 11 different languages and 7 Korean natives and collect data on total 2267 store visits. To test price discrimination based on differential search costs, we randomly select buyers to send a signal of lower search cost. Results show that negotiation and signaling induce sellers to lower their price offers. Our experimental findings, combined with auxiliary survey data from foreign visitors, suggest that sellers use the language of buyers as a proxy for the distribution of reservation values.

Keywords: Price discrimination; Language; Price negotiation; Haggling; Signaling; Willingness to pay; Field experiment (search for similar items in EconPapers)
JEL-codes: C78 C93 J16 (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:63:y:2019:i:c:p:69-98

DOI: 10.1016/j.ijindorg.2018.07.004

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