Wednesday, February 22, 2006



Here is an interesting article on Netflix. Apparently they were accused of something called "throttling" where they slow the delivery time and rental options for the most active renters. Of course it makes sense in a business approach, but it might not be all that great of a PR move.

In NewMark's Information Goods class we talked about this sort of thing. We specificially talked about and how Amazon chose to use price discrimination, but that when people found out about it they were really upset. That's how it goes.

Online companies have the ability to do these sorts of discriminating tactics and there are many, but when people find out they will have to deal with the fact that, in general consumers don't like to know that they paid a higher price than somebody else for the same thing.

Here is a website dedicated to the NetFlix analysis and another titled Hacking NetFlix.

Thanks for the links. Nice post.

Pricing decisions in the real world are much more complicated than simply equating marginal revenue to marginal cost (especessially so since no one really knows what their revenue or cost functions are).

There is actually a new book on this subject that looks interesting called "The Art of Pricing" by Rafi Mohammed.

From what I can tell, it looks like an instruction manual for how businesses can subtley discriminate between customers. I cant wait to get my hands on it.
I never heard about the Amazon price discrimination thing. Fill me in.
Here you go Jenna:

In NewMark's Class we read
Varian and Shapiro's "Information Rules" and Leibowitz and Margolis' "Winners, Losers, and Microsoft" on Price Discrimination.

Here are a couple of articles on Amazon: Krugman and WSJ
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