Steven Levitt, the author of Freakonomics, writes about how companies use 'going green' as a cover for price discrimination here. As usual, the example is from a brothel to pique your interest (yes, some economist are not afraid to admit they've sunk this low). But mental titillation aside, I have a criticism of the substance of the post.
At first blush, the implication seems to be that price discrimination is a bad thing. But price discrimination is just a way of charging something closer to what the buyer is willing to pay, just like with first class airline seats, or wait-in-line-for-hours-for-cheap-show-tickets.
It's rational to assume that price discrimination will have the side-effect of causing some consumers to try to enter the lower price bracket by changing their behavior; for instance, in this case, biking to the brothel instead of driving. This leads to less carbon emissions. So it’s win-win, right? The brothel makes more money, and less carbon is emitted by the commuter.
Maybe Levitt isn't saying price discrimination is a bad thing per se, rather that 'going green' is just a ruse to make more profits. But even if it is, what of it? If profits happen to align with 'going green', all the better. When it comes down to it, motive doesn't matter as much as effect.
Or possibly, 'going green' can have no effect on the environment whatsoever, for instance, if they gave you a discount for wearing a green hat. There, he might have a point, but he doesn't argue this, nor does his example seem to fit this case.
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