ABSTRACT
In a vocal uproar, consumers protested against Amazon.com’s strategy to price discriminate by charging their loyal customers higher prices, thereby extracting greater profits (Rosencrance 2000). Prior to this, the giant online retailer realized, as many others, that some consumers (e.g., its loyal customer base) were willing to pay a higher premium than other consumers. Following a simple economic logic, https://Amazon.com" xmlns:xlink="https://www.w3.org/1999/xlink">Amazon.com charged these consumers higher prices. Alas, when consumers found out about this strategy they became enraged: “no company should charge different consumers different prices” was a common cry. Two interesting and important facts stand out in this story. The first is that Amazon.com’s strategy is on many counts equivalent to other price discrimination approaches commonly used, including the very popular targeted coupon campaigns employed by most retailers on and off line. The second, and central to this work, is the use of the term “should” in the consumer outcry above.
