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6 Va. J.L. & Tech. 1 (2001)
Online Dynamic Pricing: Efficiency, Equity and the Future of E-Commerce

handle is hein.journals/vjolt6 and id is 267 raw text is: 6 Va. J.L. & Tech. 11 (2001), at http://www.vjolt.net O 2001 Virginia Journal of Law and Technology Association VIRGINIA JOURNAL of LAW and TECHNOLOGY UNIVERSITY OF VIRGINIA SUMMER 2001 6 VA. J.L. & TECH. 11 Online Dynamic Pricing: Efficiency, Equity and the Future of E-commerce Robert M. Weiss* ay K. Mehrotra** I. Introduction II. The Lessons of istory Dere ulation and theAirline Indust III. The New Technoloa IV. The Economics Behind Dy V. T L io n Pi VI. Conclusion I. Introduction 1. Customers of Amazon.com, the behemoth e-commerce retailer, were recently startled and quite upset when they learned that the online mega-store was charging different customers different prices for the same DVD movies.J_11 Amazon, it appears, was engaging in a form of dynamic pricing - an innovative pricing mechanism made possible by recent advances in information technology. By using the plethora of information gathered from customers - ranging from where they live to what they buy to how much they have spent on past purchases - dynamic pricing allows online companies to adjust the prices of identical goods to correspond to a customer's willingness to pay. Although Amazon later denied that it was dynamically pricing its DVDs, explaining instead that the price variations were part of a random price test, many customers were left unconvinced.i2J Amazon and other e-commerce retailers are not the only businesses applying new technologies to pricing systems. Even one of America's best known brick-and-mortar companies, Coca-Cola, was reported to have been recently testing vending machines that adjust the prices of soft drinks according to the surrounding temperature._3J If industry analysts are correct, dynamic pricing is not just a passing phase, but will soon be a vital part of all commerce in the twenty-first century.L4J 2. Dynamic pricing is not a new concept. As the economist Paul Krugman has pointed out, dynamic pricing is merely a new version of the age-old practice of price discrimination.r5J Yet, what is new about today's

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