"Dynamic pricing has come a long way since the 1980s, when airlines adopted a system that revolutionized the way prices can be tied to consumer willingness to pay. With the evolution of computing power, Al, and a better understanding of profit potential, many other B2B companies have followed suit with their own forms of dynamic pricing, varying the price of a given product or service depending on certain criteria. Ride-hailing apps, for example, adjust prices based on weather, traffic, and time of day, among other factors. Amazon reportedly changes its prices millions of times each day, leveraging vast sets of real-time data. Even B2B companies-for whom pricing is often more complex and highly customized-are now finding ways to apply dynamic pricing.
Many energy companies, for example, offer lower electricity rates at night, leading many office buildings to run their climate controls then, so they can preheat or precool offices while electricity costs are low. By leveraging the power of dynamic pricing, sellers are better able to capture revenues and balance demand against supply capacity.
However, there are many examples of companies getting it wrong. Some sellers of building materials have been accused of price gouging after hurricanes, while some sellers of pharmaceuticals have been accused of exerting market power on rare drugs, and many ticket resellers have been accused of scalping. The challenge is to use dynamic pricing in a way that builds customer trust and aligns with consumer perceptions of fairness. Success depends on a dynamic pricing mechanism that provides visible benefits to the consumer and aligns price with value delivered in a consistent and predictable manner." Effective Dynamic Pricing Starts With the Customer, WSJ Is "dynamic pricing" another form of price discrimination? Are consumers and producers better off with dynamic pricing? Explain your reasoning in no less than 400 words.