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The Government May Want to Encourage Price-Discrimination by Income

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  • Reinstein, David

Abstract

Governments have unique private information about individual incomes. This suggests a new policy tool: consumers can be offered an “OpportunityCard” certifying their income, and firms can be allowed to price-discriminate on this basis. This is politically appealing: it should reduce consumption inequality through the use of market mechanisms, rather than through taxes and spending. However, the efficiency consequences are theoretically ambiguous. I propose a pilot field experiment to provide empirical evidence on output, efficiency, and practical issues.

Suggested Citation

  • Reinstein, David, 2015. "The Government May Want to Encourage Price-Discrimination by Income," Economics Discussion Papers 15616, University of Essex, Department of Economics.
    • Handle: RePEc:esx:essedp:15616
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