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Maryland to ban A.I.-driven price increases in grocery stores

nytimes.com

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Re: Maryland to ban A.I.-driven price increases in grocery stores

#221

Post by pdonis »

WalterBright wrote: post #35
pdonis wrote: post #28

Earlier quoted context omitted.

This isn't government setting prices. It's just government outlawing a certain form of price discrimination. It's forbidding sellers from transferring consumer surplus to themselves by charging a higher price to customers that would be willing to pay a higher price for the same item. But the item is still available to buyers that wouldn't want to pay the higher price--at the lower price. The grocery stores aren't goi…

> This isn't government setting prices. It's just government outlawing a certain form of price discrimination. I.e. the government is regulating prices, yet another attempt going on for 4,000 years of trying and failing to repeal the Law of Supply and Demand. > The grocery stores aren't going to raise the overall price to compensate for losing the ability to price discriminate: that would result in less profit for th…

> the government is regulating prices

The government is regulating one particular thing that many sellers try to do (price discrimination). But it is not preventing sellers from adjusting their prices based on supply and demand. The seller can still set price equal to marginal cost--i.e., where the supply and demand curves cross--to maximize profit. They just can't extract further profit by charging richer customers more than marginal cost to transfer the consumer surplus to themselves.

> Allow me to explain how prices are set

Spare me your patronizing. I already referred to a textbook on price theory elsewhere in the thread. I know how it works. That should be evident from what I posted above and earlier in the thread.

None of what you describe is price discrimination--nor is any of it outlawed by the law under discussion here. You are describing marketing strategies involving different products--different levels of quality. Of course sellers do those things all the time, and they can continue to do it under this law.

What the law under discussion here outlaws is charging different customers different prices for the same product--for example, the appliance store you describe charging the rich person a higher price for the same refrigerator--say the midline--than the average middle class person. It says nothing whatever about the rich person paying more for a better refrigerator--the lux--than the average middle class person pays for the midline.

Re: Maryland to ban A.I.-driven price increases in grocery stores

#222

Post by pdonis »

WalterBright wrote: post #36
pdonis wrote: post #26

Earlier quoted context omitted.

If by this you mean that standard supply-demand economics can't model price discrimination, which is what's going on here, that's not correct. See, for example, Chapter 10 of David Friedman's Price Theory , where he models price discrimination using supply and demand curves just fine. In terms of this kind of analysis, price discrimination is a way for sellers to try to transfer as much as possible of what would othe…

And the buyer tries to pay as little as possible. Negotiating is a skill well worth learning (lots of books on it).

The buyer in a grocery store can't negotiate; the store just sets the price and the buyer's only choice is to take it or leave it. Under the conditions described, the product is still worth it to the buyer who the store is charging the higher price (the one the store knows has more income and so can afford to pay more), at the higher price--there's just less consumer surplus. So the buyer still buys the product. But there's no negotiation anywhere; there's no opportunity for it.

Re: Maryland to ban A.I.-driven price increases in grocery stores

#223

Post by pdonis »

WalterBright wrote: post #60
tzs wrote: post #48

Earlier quoted context omitted.

> BTW, the article is paywalled. I have no idea how a grocery store is going to adjust prices at checkout, as the prices are marked. Many stores are rolling out electronic price tags on the shelves, which can be rapidly updated wirelessly [1]. They could probably do the price adjustment there. I'd assume they wouldn't want to make it too blatant, which would be a challenge. [1] https://www.businessinsider.com/walmart…

If it adjusted the prices as someone approaches, I suspect customers would soon notice it. I'm not going to order food at a restaurant if the menu has no prices on it, even if I'm a zillionaire.

Actually, restaurants that cater to the very rich often don't have any prices on the menu, on the theory that if you have to ask what it costs, you can't afford it.

Re: Maryland to ban A.I.-driven price increases in grocery stores

#224

Post by estearum »

danlitt wrote: post #220
estearum wrote: post #165

Earlier quoted context omitted.

Your evil case is not evil The point of pricing water to that level is that it would induce other people who have access to bottled water to bring it to that market, as is desirable

> The point of pricing water to that level is... No, the point is to selfishly profit-maximise. I'm not trying to be difficult in saying that. The thing you describe is not the intent, it's the hypothetical effect. It may or may not do that (I don't think it typically does, take toilet paper during COVID for example).

Depends on the POV you're adopting.

Yes, the point for the individual setting that price is to selfishly profit-maximize. The point for us accepting a system that does this is because it signals to other water-bottle-holders that there is a dire need nearby and pays them to meet that need.

I don't think the example of a meme-driven pseudo-shortage of a paper good during a once in a lifetime global pandemic (causing both supply and demand shocks and significant information problems) is a very good point.

Re: Maryland to ban A.I.-driven price increases in grocery stores

#225

Post by HDThoreaun »

wernsey wrote: post #209
estearum wrote: post #149

Earlier quoted context omitted.

This is hilariously first-order-effects thinking... If any store used dynamic pricing to expand their margins, the others would just do the same and compete away those margins once again, with the marginal gain being handed back to consumers. Dynamic pricing on personal data is bad I think, but temporal dynamic pricing is actually very good for everyone and I hope it doesn't get thrown out by some reckless legislatio…

What happens in practice that there are only so many grocery stores where consumers can choose to shop thanks to corporate mergers and lax antitrust enforcement. So if all of them raise their prices at the same time then those consumers are out of luck. Now technically it would be illegal for the grocery stores to collude in price fixing like that, but they'll hide behind the fact that all of them will buy their surv…

If they could do that they wouldve already. Grocery prices skyrocketed during covid yet margins for grocers remained bottom of the barrel.

Re: Maryland to ban A.I.-driven price increases in grocery stores

#226

Post by HDThoreaun »

Drakim wrote: post #153
estearum wrote: post #149

Earlier quoted context omitted.

This is hilariously first-order-effects thinking... If any store used dynamic pricing to expand their margins, the others would just do the same and compete away those margins once again, with the marginal gain being handed back to consumers. Dynamic pricing on personal data is bad I think, but temporal dynamic pricing is actually very good for everyone and I hope it doesn't get thrown out by some reckless legislatio…

That's the ideal dream scenario, but in reality the market isn't that efficient. Lots of markets gouge their customers and due to power imbalances the customers can't really do anything about it. The free market solution to this is just generally to let people suffer.

> the market isn't that efficient

The grocery market is. Margins sit at 1-2%, there is absolutely no reason to believe dynamic pricing would change that. Grocery stores are one place where free markets have created incredible consumer surplus because competition is high.

Re: Maryland to ban A.I.-driven price increases in grocery stores

#227

Post by WalterBright »

pdonis wrote: post #222
WalterBright wrote: post #36

Earlier quoted context omitted.

And the buyer tries to pay as little as possible. Negotiating is a skill well worth learning (lots of books on it).

The buyer in a grocery store can't negotiate; the store just sets the price and the buyer's only choice is to take it or leave it. Under the conditions described, the product is still worth it to the buyer who the store is charging the higher price (the one the store knows has more income and so can afford to pay more), at the higher price--there's just less consumer surplus. So the buyer still buys the product. But…

The store manager has a lot of flexibility, and some of the staff are also empowered to take care of things.

If you feel you are being overcharged, see the manager. If you're nice to them, you can negotiate. Remind him how many years you've been a loyal customer. Being polite and friendly works, being a jerk does not.

The ultimate negotiating tactic is to explain your position politely to the store manager, and walk out.

I remember buying a car from a dealer. The dealer wouldn't agree to my price. He was adamant about it. So I got up, left, got in my car, started the engine, and backed out. The dealer came running out of the showroom and said he'd match my price.

Businessmen will always tell you that prices aren't negotiable. That is a tactic for rubes.

Re: Maryland to ban A.I.-driven price increases in grocery stores

#228

Post by notahacker »

skippyboxedhero wrote: post #188
notahacker wrote: post #120

Earlier quoted context omitted.

It's "bigger" in the sense it spends more money per capita. Something very American exceptionalist about the OP suggesting that this is somehow more relevant than it covering fewer people and treatments.

The point is that Europeans seem to believe that the US does not have a public healthcare system, it does. I am not sure what your point is about covering fewer people either. The point of public healthcare systems is that there are redistributive, correct? The reason the US public healthcare system does not cover everyone is because there are people who can pay for their own healthcare...which is the same in Europe.…

But actually Europeans merely correctly believe that the US is unique in how many of its citizens it allows to die from preventable deaths due to them not being able to afford healthcare whilst technically not being poor enough to meet the state aid criteria either. I am not sure you are in a position to lecture about European ignorance when you're implying everyone in the US who is ineligible for Medicare or Medicaid can afford a comprehensive insurance plan.

The irony is in the US rather than paying a low amount on private healthcare so that you could potentially beat the queue on relatively low cost state healthcare, you would be paying a much higher rate for private healthcare with more copays and coverage exemptions and also contributing a higher portion of your taxes to a publicly funded insurance program you wouldn't be able to access at all when you lost your job or your insurer denied treatment.

Re: Maryland to ban A.I.-driven price increases in grocery stores

#229

Post by WalterBright »

pdonis wrote: post #221
WalterBright wrote: post #35

Earlier quoted context omitted.

> This isn't government setting prices. It's just government outlawing a certain form of price discrimination. I.e. the government is regulating prices, yet another attempt going on for 4,000 years of trying and failing to repeal the Law of Supply and Demand. > The grocery stores aren't going to raise the overall price to compensate for losing the ability to price discriminate: that would result in less profit for th…

> the government is regulating prices The government is regulating one particular thing that many sellers try to do (price discrimination). But it is not preventing sellers from adjusting their prices based on supply and demand. The seller can still set price equal to marginal cost--i.e., where the supply and demand curves cross--to maximize profit. They just can't extract further profit by charging richer customers…

As you can negotiate prices at an appliance dealership, obviously people pay different prices for the same thing. The prices at the grocery store change daily, obviously people are paying different prices for the same thing. The guy you sit next to on an airplane paid a different price than you did. The pump price at the gas station can change hourly.

> They just can't extract further profit by charging richer customers more than marginal cost to transfer the consumer surplus to themselves.

The demand curve is different for every customer.

It is fraudulent to charge more than the posted price. But absent that, it's a negotiated price.

BTW, do you also feel it is unfair if a store charges a person less if the store realizes the person is a bit needy?

Just for fun, watch the movie "Back To School" starring Rodney Dangerfield. The funniest bit in it is when Dangerfield (a real estate developer) lectures the business professor on how business really works.

I've run multiple businesses. It's pretty clear that I did not have any power over the customers. I could not just raise prices and "extract" more profit, much as I would have liked to. It's hard to make money running a business. Businesses go bust all the time. I wouldn't pay too much attention to a business professor who had never run a business.

Re: Maryland to ban A.I.-driven price increases in grocery stores

#230

Post by [deleted] »

WalterBright wrote: post #227
pdonis wrote: post #222

Earlier quoted context omitted.

The buyer in a grocery store can't negotiate; the store just sets the price and the buyer's only choice is to take it or leave it. Under the conditions described, the product is still worth it to the buyer who the store is charging the higher price (the one the store knows has more income and so can afford to pay more), at the higher price--there's just less consumer surplus. So the buyer still buys the product. But…

The store manager has a lot of flexibility, and some of the staff are also empowered to take care of things. If you feel you are being overcharged, see the manager. If you're nice to them, you can negotiate. Remind him how many years you've been a loyal customer. Being polite and friendly works, being a jerk does not. The ultimate negotiating tactic is to explain your position politely to the store manager, and walk…

[deleted]
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