Arnold Kling likes to claim that economists underestimate the prevalence of price discrimination, while I have disagreed that economists tend to see price discrimination when costs are actually driving different prices for the same good. But I have a hard time coming up with a cost based explanation for this example, from Erik Barker, of price discrimination against poor people because their lack of cars prevents them from shopping around:

Even after controlling for store size and competition, prices are found to be 2%–5% higher in poor areas. It also finds that it is not the poverty level per se but access to cars that acts as a key determinant of consumers’ price search patterns.

When I read interesting literature like this on actual real world price setting behavior, much of tends to be from marketing science rather than economists. This is another great example… granted, though, they are using the Stiglitz-Salop model of price dispersion, so you’ve got to give that, at least, to economists.

H.T. MR

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