Consumer Fairness Concerns and Price Discrimination of Two-Sided Platforms

Sirui Li and Jing Su

No 2026-14, Working Papers ECARES from ULB -- Universite Libre de Bruxelles

Abstract: This paper studies how consumers’ concerns about fairness interact with third-degreeprice discrimination of a two-sided monopoly platform. We show that the presenceof fairness concerns creates a negative demand externality from low-willingness-to-payto high-willingness-to-pay consumers, that is, charging less to the former reduces thelatter’s demand. With this novel externality, price-discriminating among consumerstriggers fairness concerns, which lowers consumer-side demand and ultimately restrictsthe platform’s profit exploitation from the seller side. Hence, a platform whose profitpotential from sellers is larger would take consumers’ fairness concerns more seriouslyand price-discriminate less. The results can explain why some major online platforms—despite the huge profit potential of targeting prices—shy away from price discriminationin response to consumers’ fairness concerns, while others care little about unfairnesscomplaints when price-discriminating among consumers.

Keywords: fairness concerns; price descrimination; two-sided markets (search for similar items in EconPapers)
JEL-codes: D42 D91 L11 L86 (search for similar items in EconPapers)
Pages: 39 p.
Date: 2026-05-11
New Economics Papers: this item is included in nep-com, nep-mic and nep-pay
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