Internet price discrimination: Urban myth or the invisible hand?

Joe Bosso 8 Sep 2021

Stay alert to the possibility of price discrimination through researching the products and services that you use

The internet attempts to give every user a personalized, custom experience with each element designed with their preferences, needs, and desires in mind. Today, we live in a personalized digital world that aims to understand each individual at a personal level in order to serve them with a journey that only they would experience. Price discrimination is a potentially negative detour in these extremely personalized user journeys, particularly where this is not transparent to or expected by the user.

Knowing the individual also gives companies a chance to adjust elements in marketplaces, such as the product options, prices and recommendations shown to the user. Over the years, it has become a common practice to search for airline tickets on private browsing or incognito mode to prevent travel websites from using your search history to identify opportunities to charge higher prices. There has also been anecdotal evidence of price differences seen for the same product or service depending on factors such as different locations, different devices, and other seemingly innocuous information. At Avast, we wanted to explore this phenomenon with a quick experiment using a VPN.

We conducted an experiment to observe the effect of location (country) on the price of airline tickets. To isolate the effects of personal search histories and browser identification, the experiment was performed using Safari’s private browsing. Using Avast SecureLine VPN, the location of the user was changed to one of several countries available: Brazil, Czech Republic, France, UK, US, and Russia. With the country selected, each travel website was visited in a completely new private browsing session.

On each website, a flight for August 1, 2021, from San Francisco to London was used as the search query and the cheapest flight option (excluding alternative date options) was recorded. The experiment showed that websites offered prices generally within a 10 USD range when compared across locations. There were only 2 cases (a 90 USD difference on in the UK and a 40 USD difference on in Brazil) where the prices differed by more than 10 USD.

The experiment shows that price variation is minimal when looking for flight tickets from different countries. Though different websites showed different prices and options for the cheapest flights, the prices on each website when visiting from different countries is within 10 dollars of each other. From the limited experiments conducted, we didn't uncover any notable evidence of price discrimination based on the users country of origin, and this seems in line with earlier research suggesting that airline price discrimination is not as extensive as often supposed.

This experiment, however, does not give us any hints about other forms of price discrimination or differentiation that may be prevalent on internet marketplaces, such as rural vs. urban users, or users with different brands of devices. There could also be necessary and legitimate elements of price discrimination based on location, such as taxes, shipping costs, and regional pricing strategies by the same company.

Our recommendation is to stay alert to the possibility of price discrimination through some additional effort with research about products and services that you use. Take the time to carry out some extra searches to give you a broader perspective on the landscape shown to you.

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