Price discrimination accomplishes: redistribution from rich to poor, without government intervention, on a strictly voluntary basis, tending to increase efficiency. What’s not to love?

We already accept price discrimination! Coupons famously serve this purpose (among others), allowing price-sensitive customers to get access to cheaper groceries while still charging the higher price to those who really don’t care. Returns are also a form of price discrimination (if you think about risk as part of the price). And neither of these mechanisms are perfect. Both favor the highly conscientious as much as the price-sensitive, and coupons penalize the desperate and the rushed.

I’m happy to go further. Stores want to discriminate based on price sensitivity, but have trouble doing so, because the really central indicators (income, savings) are not directly visible. So stores have to discriminate based on crude proxies (are you using the app? what part of town are you in?). It’s better than nothing, but we can imagine a better world. Give merchants access to IRS income verification, and let them discriminate based on what they actually care about. Universities do a pretty good job of price discrimination, and this is part of how.

My feelings about price discrimination are not unconditional love. There’s one form of price discrimination which is clearly bad no matter what moral hat I wear. If you charge a higher price based on which customers are unable to shop for alternatives, this is taking advantage of a non-competetive market in a way which doesn’t tend to make the market any more competetive. It’s analogous to the so-called “price gouging” that happens in an emergency, except without the feature of drawing more resources to the task of acquiring necessary goods. This is a pure tax on misfortune.

There’s also the sort of price discrimination made illegal under Robinson-Patman. Recklessly glossing: price discrimination can be unlawful when it has a good chance of suppressing competition. As in the above example, these forms of price discrimination are not increasing efficiency. Fortunately, the example above would incur a great deal of opprobrium in any social climate I can imagine, and price discrimination aiming to suppress competition (as opposed to simply exploiting its absence) is already illegal.

And now for some possible objections. (This isn’t meant to be an exhaustive list; for example, I’m deliberately not replying to “this benefits the corporation at the expense of the consumer”. If you have nothing nice to say…)

Redistribution is bad! This is not obvious. Government redistribution is (presumptively, not always) bad, but this isn’t that. This is a private actor finding that it’s within its own economic interest to perform redistribution. This sort of “third-party redistribution” (distinct from charitable giving!) already happens:

• When people choose to shop at local, or family-run, businesses. (Since the prices are likely a bit higher, there’s also some charitable giving here, but the ordinary surplus that a large chain would have gathered is being redistributed.)
• When stores offer veteran discounts. (In a competetive market, this one is redistribution from the average customer to the veterans, rather than charitable.)
• Insurance. (Insurance is, by definition, redistribution from the lucky to the unlucky.)

Now, it’s plausible that redistribution schemes from rich to poor generally hurt efficiency as a result of the new allocation of resources. But in the case of price discrimination, the act that results in redistribution is itself more efficient. So: assuming we aren’t caring about the welfare benefits of redistribution, it’s still not clear that this form of redistribution is net inefficient.

But it’s unfair! Yes, in a shallow sense. The fact that different people have different amounts of money is also unfair, in an equally shallow sense. If nothing else, there’s a pleasing symmetry here.

What if stores discriminate on the basis of race? Here, in lieu of expressing a strong normative position, I will simply note a polydactyl’s handful of facts.

1. A rational, self-interested actor will generally charge the higher price to the wealthier group.

2. Price discrimination on the basis of race is generally illegal (under the Civil Rights Act of 1964, in a “place of public accomodation”).

3. Laws against racial price discrimination are well-obeyed.

4. Discrimination on the basis of race in higher education is generally illegal (under the same Civil Rights Act of 1964).

5. Laws against discrimination on the basis of race in higher education are not well-obeyed.

6. A rational, self-interested actor will generally favor the wealthier group in college admissions.

I invite you to combine these facts with your moral intuitions and reach whatever conclusion you may. For my part I don’t see a simple moral story into which they all fit, and I don’t believe that price discrimination is substantially related to racial discrimination.