Document Type
Discussion Paper
Publication Date
6-26-2025
CFDP Number
2447R1
CFDP Revision Date
05/28/2026
CFDP Pages
108
Journal of Economic Literature (JEL) Code(s)
D42, D63, D82
Abstract
A monopolist offers personalized prices to consumers with unit demand. Consumers differ in their values, costs, and \emph{protected characteristics}---such as race or gender. The seller is subject to a non-discrimination constraint: consumers with the same cost, but different protected characteristics must face identical price distributions. Such regulations are present in markets like credit or insurance. We characterize the optimal pricing rule. Under this rule, surplus accrues to both protected groups, but only to those with intermediate values. Strengthening the constraint to cover transaction prices redistributes surplus, harming the low-value group and benefiting the high-value group. Meanwhile, prohibiting the use of protected characteristics as pricing inputs instead of regulating outputs harms the low-value group.
Recommended Citation
Strack, Philipp and Yang, Kai Hao, "Non-Discriminatory Personalized Pricing" (2025). Cowles Foundation Discussion Papers. 2863.
https://elischolar.library.yale.edu/cowles-discussion-paper-series/2863