An Empirical Study on Online Price Differentiation

Abstract

Price differentiation describes a marketing strategy to determine the price of goods on the basis of a potential customer's attributes like location, financial status, possessions, or behavior. Several cases of online price differentiation have been revealed in recent years. For example, different pricing based on a user's location was discovered for online office supply chain stores and there were indications that offers for hotel rooms are priced higher for Apple users compared to Windows users at certain online booking websites. One potential source for & relevant distinctive features are system fingerprints, i.e., a technique to recognize users' systems by identifying unique attributes such as the source IP address or system configuration. In this paper, we shed light on the ecosystem of pricing at online platforms and aim to detect if and how such platform providers make use of price differentiation based on digital system fingerprints. We designed and implemented an automated price scanner capable of disguising itself as an arbitrary system, leveraging real-world system fingerprints, and searched for price differences related to different features (e.g., user location, language setting, or operating system). This system allows us to explore price differentiation cases and identify those characteristic features of a system that may influence a product's price.

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