Personalizing Prices to Redistribute Wealth in Antitrust and Public Utility Rate Regulation

Research output: Contribution to journalArticle

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Abstract

The information age is enabling firms with even small amounts of market
power to personalize the prices they charge to each consumer in the market.
Left to their own devices, firms will use this new power to increase profits by
charging prices personalized to the maximum that each consumer is willing to
pay. But government can also use the new power to personalize prices to
equalize wealth—by insisting that firms personalize high prices to the rich and
low prices to the poor—and most of the legal rules needed to do so are already
in place. Both the antitrust laws and state and federal rate regulatory regimes
already require enforcers to take the distribution of wealth into account in
condemning anticompetitive practices or approving prices. Before the
information age made personalized pricing possible, enforcers hesitated
aggressively to use their powers to achieve wealth-equalizing prices because
they worried that doing so would harm efficiency. But personalized prices are
always efficient, whether set high by firms to maximize profits or adjusted by
regulators to equalize wealth, creating an unprecedented opportunity for
government to do distributive justice.
Original languageAmerican English
Pages (from-to)1408-1465
JournalWisconsin Law Review
Volume2022
StatePublished - 2022

Keywords

  • How Antitrust Really Works: A Theory of Input Control and Discriminatory Supply
  • Ramsi Woodcock
  • SSRN

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