IDEAS home Printed from https://ideas.repec.org/a/wly/mgtdec/v46y2025i6p3619-3637.html

Price Discrimination and Government Supervision Under Unreliable Consumer Oversight in the Context of the Platform Economy

Author

Listed:
  • Jiaquan Yang
  • Yixia Huang
  • Yihui Zhu
  • Jiafu Su

Abstract

We consider an evolutionary game involving an e‐commerce platform (EP) and a government regulatory department (GRD), in which the EP determines whether to carry out price discrimination under unreliable consumer oversight and the GRD decides whether to monitor the EP taking into account the supervision cost. Analytical results reveal that, when consumer oversight is notably unreliable, or even when it is somewhat reliable but the conditions are not ripe for government supervision, price discrimination is inevitable. With the presence of consumer oversight, the GRD can deter the EP from engaging in price discrimination without incurring significant supervision costs, enjoying a “free ride” in maintaining market fairness. However, when the GRD's supervision cost are sufficiently low, or even if they are not low but consumer oversight remains highly unreliable, it becomes advantageous for the GRD to supervise the EP. Contrary to the prevailing notion that the GRD ought to vigorously enhance consumer oversight, our research indicates that augmenting the consumer oversight reliability may not always be in the GRD's best interest. Furthermore, as time progresses, bolstering the reliability of consumer oversight is instrumental in swiftly eradicating prevalent price discrimination, while diminishing the cost associated with supervision would facilitate the prompt initiation of government supervision.

Suggested Citation

  • Jiaquan Yang & Yixia Huang & Yihui Zhu & Jiafu Su, 2025. "Price Discrimination and Government Supervision Under Unreliable Consumer Oversight in the Context of the Platform Economy," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 46(6), pages 3619-3637, September.
    • Handle: RePEc:wly:mgtdec:v:46:y:2025:i:6:p:3619-3637
    DOI: 10.1002/mde.4544
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/mde.4544
    Download Restriction: no
    File URL: https://libkey.io/10.1002/mde.4544?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Sanyal, Romola & Ferreri, Mara, 2018. "Platform economies and urban planning: Airbnb and regulated deregulation in London," LSE Research Online Documents on Economics 87473, London School of Economics and Political Science, LSE Library.
    2. Yunke Mai & Bin Hu & Saša Pekeč, 2023. "Courteous or Crude? Managing User Conduct to Improve On-Demand Service Platform Performance," Management Science, INFORMS, vol. 69(2), pages 996-1016, February.
    3. Daniel Friedman, 1998. "On economic applications of evolutionary game theory," Journal of Evolutionary Economics, Springer, vol. 8(1), pages 15-43.
    4. T. Tony Ke & K. Sudhir, 2023. "Privacy Rights and Data Security: GDPR and Personal Data Markets," Management Science, INFORMS, vol. 69(8), pages 4389-4412, August.
    5. Amit Mehra & Ram Bala & Ramesh Sankaranarayanan, 2012. "Competitive Behavior-Based Price Discrimination for Software Upgrades," Information Systems Research, INFORMS, vol. 23(1), pages 60-74, March.
    6. Krista J. Li & Sanjay Jain, 2016. "Behavior-Based Pricing: An Analysis of the Impact of Peer-Induced Fairness," Management Science, INFORMS, vol. 62(9), pages 2705-2721, September.
    7. Weihua Liu & Shangsong Long & Shuang Wei & Dong Xie & Jingkun Wang & Xinyun Liu, 2022. "Smart logistics ecological cooperation with data sharing and platform empowerment: an examination with evolutionary game model," International Journal of Production Research, Taylor & Francis Journals, vol. 60(13), pages 4295-4315, July.
    8. Hongqiao Chen & Ming Hu & Jiahua Wu, 2023. "Intertemporal Price Discrimination via Randomized Promotions," Manufacturing & Service Operations Management, INFORMS, vol. 25(3), pages 1176-1194, May.
    9. Liyin Jin & Yanqun He & Ying Zhang, 2014. "How Power States Influence Consumers' Perceptions of Price Unfairness," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 40(5), pages 818-833.
    10. Zeng, Nengmin & Wu, Guangdong & Zeng, Dongling & Liu, Ang & Ren, Tinghai & Liu, Bingsheng, 2023. "Optimal mechanism for project splitting with time cost and asymmetric information," International Journal of Production Economics, Elsevier, vol. 264(C).
    11. Liu, Weihua & Long, Shangsong & Xie, Dong & Liang, Yanjie & Wang, Jinkun, 2021. "How to govern the big data discriminatory pricing behavior in the platform service supply chain?An examination with a three-party evolutionary game model," International Journal of Production Economics, Elsevier, vol. 231(C).
    12. Anil Arya & Brian Mittendorf & Dae-Hee Yoon, 2021. "The Impact of Uniform Pricing Regulations on Incentives to Generate and Disclose Accounting Information," Management Science, INFORMS, vol. 67(3), pages 1975-1992, March.
    13. da Silva Rocha, André Barreira & Salomão, Gabriel Meyer, 2019. "Environmental policy regulation and corporate compliance in evolutionary game models with well-mixed and structured populations," European Journal of Operational Research, Elsevier, vol. 279(2), pages 486-501.
    14. Xue-Yan Wu & Zhi-Ping Fan & Bing-Bing Cao, 2023. "An analysis of strategies for adopting blockchain technology in the fresh product supply chain," International Journal of Production Research, Taylor & Francis Journals, vol. 61(11), pages 3717-3734, June.
    15. Hosseini-Motlagh, Seyyed-Mahdi & Choi, Tsan-Ming & Johari, Maryam & Nouri-Harzvili, Mina, 2022. "A profit surplus distribution mechanism for supply chain coordination: An evolutionary game-theoretic analysis," European Journal of Operational Research, Elsevier, vol. 301(2), pages 561-575.
    16. Chioveanu, Ioana, 2024. "Consumer data and price discrimination by consideration sets," Economics Letters, Elsevier, vol. 236(C).
    17. Ram D. Gopal & Hooman Hidaji & Sule Nur Kutlu & Raymond A. Patterson & Niam Yaraghi, 2023. "Law, Economics, and Privacy: Implications of Government Policies on Website and Third-Party Information Sharing," Information Systems Research, INFORMS, vol. 34(4), pages 1375-1397, December.
    18. Valletti, Tommaso M., 2003. "Input price discrimination with downstream Cournot competitors," International Journal of Industrial Organization, Elsevier, vol. 21(7), pages 969-988, September.
    19. Belleflamme, Paul & Vergote, Wouter, 2016. "Monopoly price discrimination and privacy: The hidden cost of hiding," Economics Letters, Elsevier, vol. 149(C), pages 141-144.
    20. Maxime C. Cohen & Alexandre Jacquillat & Haotian Song, 2023. "Price Discrimination and Inventory Allocation in Bertrand Competition," Manufacturing & Service Operations Management, INFORMS, vol. 25(1), pages 148-167, January.
    21. Koray Cosguner & Tat Y. Chan & P. B. (Seethu) Seetharaman, 2017. "Behavioral Price Discrimination in the Presence of Switching Costs," Marketing Science, INFORMS, vol. 36(3), pages 426-435, May.
    22. Tremblay, Mark J., 2019. "Pareto price discrimination," Economics Letters, Elsevier, vol. 183(C), pages 1-1.
    23. Sun, Qingqing & Chen, Hong & Long, Ruyin & Yang, Jiahui, 2023. "Who will pay for the “bicycle cemetery”? Evolutionary game analysis of recycling abandoned shared bicycles under dynamic reward and punishment," European Journal of Operational Research, Elsevier, vol. 305(2), pages 917-929.
    24. Xiao, Tiaojun & Yu, Gang, 2006. "Supply chain disruption management and evolutionarily stable strategies of retailers in the quantity-setting duopoly situation with homogeneous goods," European Journal of Operational Research, Elsevier, vol. 173(2), pages 648-668, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Chongwoo Choe & Noriaki Matsushima & Shiva Shekhar, 2025. "The Bright Side of the GDPR: Welfare-Improving Privacy Management," Management Science, INFORMS, vol. 71(8), pages 6836-6858, August.
    2. Nami, Nazanin & Pishchulov, Grigory & Quariguasi Frota Neto, Joao, 2025. "Circular economy application in pharmaceutical supply chains in the UK: a holistic evolutionary game approach," European Journal of Operational Research, Elsevier, vol. 326(3), pages 451-466.
    3. Ian A. Kash & Peter B. Key & Spyros I. Zoumpoulis, 2023. "Optimal Pricing and Introduction Timing of Technology Upgrades in Subscription-Based Services," Operations Research, INFORMS, vol. 71(2), pages 665-687, March.
    4. Maryam Johari & Seyyed-Mahdi Hosseini-Motlagh, 2024. "An evolutionary game theory approach for analyzing risk-based financing schemes," Annals of Operations Research, Springer, vol. 336(3), pages 1637-1660, May.
    5. Li, Na & Lv, Tao & Guo, Yuxia & Xu, Jie & Zang, Xiuzhu & Guo, Jianli & Li, Mengyue, 2025. "Can government supervision ensure compliance by photovoltaic enterprises? An evolutionary game analysis," Energy Policy, Elsevier, vol. 206(C).
    6. Zhao, Tian & Liu, Zhixin & Jamasb, Tooraj, 2022. "Developing hydrogen refueling stations: An evolutionary game approach and the case of China," Energy Economics, Elsevier, vol. 115(C).
    7. Shuaicheng Liu, 2024. "Privacy regulation in asymmetric environments," Journal of Regulatory Economics, Springer, vol. 66(2), pages 157-173, December.
    8. Qiaohong Pan & Wenping Luo & Zongyuan Liu & Mengmeng Luan, 2025. "Research on Legitimacy Building and Governance of Transportation Service Platform Ecosystem Based on Three-Party Evolutionary Game," SAGE Open, , vol. 15(1), pages 21582440241, January.
    9. Zhang, Mengdi & Yang, Wanting & Zhao, Zhiheng & Wang, Shuaian & Huang, George Q., 2024. "Do fairness concerns matter for ESG decision-making? Strategic interactions in digital twin-enabled sustainable semiconductor supply chain," International Journal of Production Economics, Elsevier, vol. 276(C).
    10. Jingjing Li & Haiyang Feng & Nan Feng & Nan Yuan, 2026. "Optimal Data Collection Levels for Two-Sided Software Platforms: Considering User Privacy Concerns," Information Systems Frontiers, Springer, vol. 28(1), pages 249-271, February.
    11. Ning, Jiajun & Xiong, Lixin & Shao, Changhua, 2025. "Dynamic evolution analysis of enterprises digital technology innovation strategies in energy supply chain collaboration: A bargaining theory perspective," Energy Economics, Elsevier, vol. 151(C).
    12. Zhitao Xu & Adel Elomri & Roberto Baldacci & Laoucine Kerbache & Zhenyong Wu, 2024. "Frontiers and trends of supply chain optimization in the age of industry 4.0: an operations research perspective," Annals of Operations Research, Springer, vol. 338(2), pages 1359-1401, July.
    13. Silveira, Douglas & Vasconcelos, Silvinha, 2020. "Essays on duopoly competition with asymmetric firms: Is profit maximization always an evolutionary stable strategy?," International Journal of Production Economics, Elsevier, vol. 225(C).
    14. Zhijun Chen & Chongwoo Choe & Noriaki Matsushima, 2020. "Competitive Personalized Pricing," Management Science, INFORMS, vol. 66(9), pages 4003-4023, September.
    15. Dongqing Chen & Chaoqun Ma & Liwei Zhang & Lijie Li, 2025. "Unraveling the role of data sharing in open finance diffusion: an evolutionary game approach on complex networks," Future Business Journal, Springer, vol. 11(1), pages 1-28, December.
    16. Liu, Changyu & Gong, Wanrong & Dong, Guanglong & Ji, Qiang, 2024. "Regulation of environmental, social and governance disclosure greenwashing behaviors considering the risk preference of enterprises," Energy Economics, Elsevier, vol. 135(C).
    17. Huang, Xingjun & Lin, Yun & Lim, Ming K. & Zhou, Fuli & Ding, Rui & Zhang, Zusheng, 2022. "Evolutionary dynamics of promoting electric vehicle-charging infrastructure based on public–private partnership cooperation," Energy, Elsevier, vol. 239(PD).
    18. Jian Liu & Yong‐Pin Zhou & Jian Chen, 2023. "Customer segmentation and ex ante fairness: A queueing perspective," Production and Operations Management, Production and Operations Management Society, vol. 32(10), pages 3246-3265, October.
    19. Zhijun Chen & Chongwoo Choe & Noriaki Matsushima, 2020. "Competitive Personalized Pricing," Management Science, INFORMS, vol. 66(9), pages 4003-4023, September.
    20. Xu, Xiaoping & Li, Nan & Zheng, Shengming & Cheng, T.C.E. & Liu, Hua, 2025. "Blockchain adoption under integrated and differentiated pricing strategies in the farm-adopted mode," International Journal of Production Economics, Elsevier, vol. 290(C).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:mgtdec:v:46:y:2025:i:6:p:3619-3637. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www3.interscience.wiley.com/cgi-bin/jhome/7976 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.