Individual Price Discriminaton in E-Commerce – An impossibility?

As the EC channel is ideally suited to better comprehend customers' price sensitivity, communicate pricing policies and adjust prices regularly EC marketers are eager to charge people differently for the same product and according to their willingness to pay. This practice implies that not all customers are treated equally and as a result raises fairness concerns. In fact, when Amazon.com trialed this type of practice it encountered strong customer backlash..Despite this first reported negative experience, this paper challenges the common notion that individual price discrimination is generally perceived as unfair and shows ways on how the online channel may be used to raise fairness perceptions. An extensive overview of the pricing and fairness literature from economics is given. Furthermore, empirical results from an experiment with 160 subjects are presented.