Hal Varian studied this problem. His conclusions:
"(i) Efficient pricing in such environments will typically involve
prices that differ across consumers and type of service; (ii) producers
will want to engage in product and service differentiation in order for
this differential pricing to be feasible; and, (iii) differential
pricing will arise naturally as a result of profit seeking by firms. It
follows that differential pricing can generally be expected to
contribute to economic efficiency."
Differential pricing is also the outcome of globalization. As brands
become ubiquitous and as the information superhighway renders prices
comparable and transparent - different markets react differently to
price signals. In impoverished countries, differential pricing was
introduced illegally where manufacturers insisted on rigid, rich-world,
price lists.
Piracy of intellectual property, for instance, is a form of coercive
(and illegal) differential pricing. The existence of thriving rip-off
markets proves that, at the right prices, demand is rife (demand
elasticity). Both piracy and differential pricing may be spreading to
scholarly publishing and other form of intellectual property such as
software, films, music, and e-books.
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