Differential Pricing: The Economics and International Evidence

Shane Byrne and Yvonne McCarthy

No 10/FS/20, Financial Stability Notes from Central Bank of Ireland

Abstract: In broad terms, differential pricing refers to a situation where individual consumers or groups of consumers are charged different prices for similar goods or services. The practice is widely used across a range of markets, and can bring benefits for consumers. For example, it can encourage competition and innovation and it can facilitate market access for consumers who might be unable or unwilling to pay a uniform price. However, differential pricing can also bring costs for consumers, particularly if it affects vulnerable groups or those with a lower ability or willingness to search for better offers. In this Note, we provide an overview of the economics of differential pricing and review several international cases where public authorities have investigated the practice.

Date: 2020-11
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