By Fair Means or Foul?

Executive Summary

Dynamic pricing is when businesses change the price of goods and services in real time according to data on supply and demand. It is believed to be used in an increasing number of industries, such as ride-hailing, food, retail, airline and hotels, and has gained recent attention due to Ticketmaster’s pricing of tickets for the Oasis reunion tour. Although it has since been found that Ticketmaster did not use a responsive algorithm to dynamically price tickets, controversy over the sale prompted concern about whether dynamic pricing is in the interests of consumers.

Dynamic pricing can lead to benefits for consumers by incentivising greater supply of a service or by lowering prices for some customers and increasing access. However, it can also lead to harm: consumers may lose access if prices rise to a level that is beyond their means; rapid price changes may encourage impulsive decisions or pressurise people into making purchases at higher prices; and it may also cause emotional harm, either anxiety during the purchase process or subsequent regret at an impulsive purchase. 

As dynamic pricing becomes more widely adopted it will be essential that the potential for consumer harm is minimised. Dynamic pricing must be used in ways that consumers believe are broadly fair. To inform the public discourse about how that happens, Which? has undertaken research to develop an understanding of what consumers consider to be fair use of dynamic pricing. 

We conducted qualitative research through four focus group discussions. The discussions were structured to explore consumers’ perceptions of fair and unfair dynamic pricing by drawing on past experiences and considering a range of viewpoints, including those of businesses. The discussions were focussed on two sectors where dynamic pricing was believed to be used: airlines and event ticketing. The final stage of each focus group examined the trade-offs consumers are willing to make between efficiency and fairness.

Our research shows that people have nuanced views about when dynamic pricing is fair. They think it is sometimes reasonable to use dynamic pricing, but we identified four factors that affect whether consumers think its use is fair. These are:

1. Transparency - Consumers felt it was important that there is transparency that prices could change dynamically and about the rationale for price fluctuations. When there is a lack of transparency, consumers may feel misled or pressured into paying more. 
2. Price predictability - This complements transparency by giving people a sense of stability and control. When prices are not predictable consumers are less able to make a rational decision and are more likely to feel exploited. For example, when in a queue to buy event tickets, if prices increase unpredictably then it can make the event unaffordable, result in wasted transaction time, or create pressure for consumers to make impulsive purchases that may not be in their best interest.  
3. Choice over whether to pay a dynamic price - Dynamic pricing often favours those with the ability to be more flexible with their spending and plans. When consumers feel that they have no meaningful alternative but to pay a price that has increased due to dynamic pricing, they are more likely to view a company’s behavior as exploitative and opportunistic. The perception that a company is taking advantage of limited options to increase profits at the consumer’s expense creates frustration and resentment.
4. The distribution of benefits to both sides of the market - People are more likely to consider dynamic pricing fair if they can see potential benefits also exist for customers. For example, pricing that adds value for consumers or helps maintain the quality of a service, e.g. the availability of drivers in a ride-hailing service, tends to be seen as reasonable. However dynamic pricing which is seen to only increase profits is disdained. 

These four factors represent aspects of both procedural and distributional fairness and show that it is important to consumers that dynamic pricing is implemented in a way that consumers consider is reasonable and that it is not used to exploit them.

Procedural fairness refers to a firm’s conduct and the way in which it treats its customers. Transparency and price predictability are aspects of this. UK consumer law places obligations on firms to act fairly, for example it may require some aspects of transparency that are seen as important to consumers such as being clear that prices may change in real time. However, it may be necessary to further update the law to adequately address other fairness concerns. Participants in our research were particularly unhappy when prices changed after they had joined a queue or thought they had secured a price for a service. In circumstances like these, people indicated a deep sense of unfairness because they felt frustrated and exploited. To prevent this, the government could ban the use of dynamic pricing to increase the price of a product during the transaction process by adding it to Schedule 20 of the DMCCA (the ‘banned practice list’). This would align with the Australian government’s intention for a similar ban.  

The other two factors relate to distributional fairness and are likely to be highly context dependent. Any intervention to address distributional unfairness arising from the use of dynamic pricing would ideally be sector specific, and analyses of the circumstances would need to be undertaken in each case. The factors to be explored should include, but not be limited to: whether a good or service is considered essential, the market power of the firm(s) using dynamic pricing, which consumer groups are paying higher prices, and the extent to which these consumers can exercise choice so that their purchase decisions represent willingness to pay and not an inability to avoid. There would be a greater imperative for regulatory intervention in cases where price discrimination leads to worse outcomes for vulnerable consumers.

Introduction

Price discrimination is an everyday feature of consumer markets, with businesses often charging different prices to different customers for the same product. The price might vary according to the time of day (e.g. energy tariffs) or who is buying (e.g. pensioners or students receiving discounts). In most cases, this price discrimination is socially accepted. It creates benefits for some consumers and it tends to be considered fair when it complies with existing consumer protection laws.

However, the ability of firms to price discriminate has increased dramatically in recent years as firms have been able to use more data to inform their pricing decisions and can update prices costlessly when selling online. This has led to increased use of two types of algorithmic pricing: personalised pricing, where a bespoke price for an individual or small group of individuals is calculated using personal data; and dynamic pricing, where the price of goods and services is changed according to real-time supply and demand.

The practice of dynamic pricing has received particular attention in recent months. A trigger for this was Ticketmaster’s sale of tickets in September 2024 for Oasis’ 2025 reunion tour. The sale achieved notoriety as ticket prices increased before fans’ eyes according to a practice that Ticketmaster at the time described as 'in demand' pricing. The Competition and Markets Authority (CMA) has since found that prices were not adjusted in real time using an algorithm, but the genie was already out of the bottle.

 In November 2024, the CMA opened a project to consider how dynamic pricing is being used across different sectors of the economy, the benefits of the practice and finally any challenges impacting consumers. Then, in January 2025, the Department of Business and Trade launched a call for evidence on pricing practices used in the events ticketing market that includes dynamic pricing amongst other practices. There has also been considerable interest in the use of dynamic pricing internationally. For example, in November 2024, Australian fans of Green Day faced unexpected price hikes when tickets went on sale, prompting further scrutiny from the Australian Competition and Consumer Commission (ACCC), which has been monitoring the fairness of dynamic pricing practices. 

Dynamic pricing is believed to be used in many different industries, such as ride-hailing, food, retail, airline and hotels, although it is difficult to estimate its prevalence as it is a commercial practice and its effect may resemble that of other forms of temporal price discrimination like peak and off-peak pricing or advance booking. We would consider Uber’s surge pricing to be a type of dynamic pricing, but not the case where a pub pre-determines to charge more during a busy time, for example when there is a sporting event, even if the business itself describes this as dynamic.

Dynamic pricing can bring potential benefits to consumers. It can lead to lower prices for some customers and especially if it means they can afford to buy something they otherwise wouldn’t be able to. For example, a theme park may offer cheaper entry at an unpopular time, meaning a family can afford to visit when they otherwise wouldn’t have. They can also incentivise greater supply of a service, so people can access a product or service that otherwise wouldn’t be available. For example, Uber’s surge pricing might encourage more drivers to stay on the road so more people can get transport.

 However, it can also have negative consequences for consumers as it has the potential to cause a range of potential harms:

1. Loss of access - If prices rise to a level that is beyond someone’s affordability;
2. Financial harm - Rapid price changes and limited-time offers associated with dynamic pricing may encourage impulsive decisions. If people feel pressured into making purchases at higher prices due to fear of further increases then they may pay more than they would be willing to if prices were not dynamic; 
3. Stress - The unpredictability of dynamic pricing may create a sense of urgency and anxiety;
4. Dissatisfaction or regret - Consumers may buy items hastily only to later regret their purchases when the price drops or when they realize the purchase was unnecessary.

In addition, there are broader concerns about the fairness of dynamic (and personalised) price discrimination that may reflect that existing laws largely predate the use of algorithmic pricing and were not designed with it in mind. Any updating of consumer law would need to be rooted in a clear understanding of how consumers feel about the use of dynamic pricing. To inform this, Which? has conducted qualitative research to understand consumer attitudes to the use of dynamic pricing in the contexts of airline and event ticketing. 

Purpose of the research

This research aims to provide insights to inform ongoing work being conducted by the Department of Business and Trade and the CMA. By focusing on consumers' needs and perceptions, the research seeks to identify the factors that would enable dynamic pricing to be viewed as fair and equitable.

The research focuses on the circumstances under which consumers find the use of dynamic pricing to be fair. It does this by talking to consumers about their experiences of dynamic pricing before putting them in the shoes of businesses to think about the benefits and possible use cases of dynamic pricing. Finally, it explores the factors that contribute to perceptions of unfair and, in turn, fair dynamic pricing. 

The findings from this research will be key in shaping Which?’s responses to current and future consultations relating to dynamic pricing. These insights will inform recommendations for fair and balanced practices ensuring that consumer concerns are addressed in regulatory and policy discussions. 

Overview of report

In the next section, we set out the qualitative research methodology that we used to explore the issue of fairness in dynamic pricing with consumers. This is followed by two sections setting out our findings.

In the first of these we explore consumers' knowledge and awareness of dynamic pricing across industries, highlighting the negative effects of unfair practices, such as financial harm, stress, and loss of trust. Case studies illustrate how these issues increase frustration and affect equity and accessibility. We also explore how awareness of dynamic pricing can affect consumer behaviour and create consumer harm.

In the second findings section we examine consumer expectations for fair dynamic pricing, focusing on four factors that came to the fore in the focus groups: transparency; price predictability; how much choice customers have to pay a dynamic price; and the distribution of benefits between a business and its customers. 

In the concluding section we discuss the implications of our findings, setting out what we think this means for how the existing consumer protection framework could be made more effective for ensuring that consumers are treated fairly when firms use dynamic pricing. 

Methodology

To explore consumers’ perceptions of dynamic pricing, we conducted qualitative research through four focus group discussions. We choose a qualitative approach to allow us to explore consumers' experiences and attitudes towards dynamic pricing in a deliberative way, with focus groups allowing participants to hear and discuss other views. Focus groups gave us the opportunity for participants to learn from others to effectively reflect and engage critically with a subject they may not have reflected on previously. This ensured that we could capture a detailed understanding of consumers’ attitudes toward dynamic pricing, providing insights into how fairness is perceived and how businesses might address consumer concerns effectively.

A total of 31 participants took part in the research; 7-8 in each focus group. Participants were selected to ensure representation of the UK’s demographics, reflecting the diversity of the population. The demographic mix of the group was broadly in line with the general population in terms of gender, age, income and ethnicity. Once the sample was recruited participants were allocated to one of the four focus groups. Although the research did not specifically aim to recruit consumers in vulnerable circumstances, the sample included a small number of participants with characteristics that could indicate vulnerability, such as unemployment and low income. No prior knowledge of dynamic pricing was required to participate, as the aim was to capture a broad range of consumer perspectives.

The focus groups were split into four stages, exploring different experiences, perspectives and elements of dynamic pricing. Figure 1 illustrates the structure of these focus groups.

Figure 1 - Different stages explored within the dynamic pricing focus groups 

Stages 1–3 were designed to explore consumers’ perceptions of fair and unfair dynamic pricing by drawing on past experiences and considering a range of viewpoints, including those of businesses. Whilst the first stage focused on people’s personal experiences, the remainder of the discussions within the focus groups were structured around two sectors where dynamic pricing was believed to be used: airlines and event ticketing. Stage 4 built on previous insights, examining the trade-offs consumers are willing to make between efficiency and fairness.

The data from the focus groups was analysed by identifying key themes, patterns, and insights from participants’ discussions. This involved developing an analytical framework, coding responses into categories, and interpreting the data to uncover common perspectives, differences, and underlying motivations. The findings provided a clearer understanding of how consumers perceive responsible dynamic pricing, highlighting practices they deem acceptable and those that raise concerns.

Consumer understanding, attitudes and behaviour

The primary objective of this research is to determine the factors that determine whether consumers find the use of dynamic pricing fair, but before we explicitly examine that, we first need to establish more general attitudes that consumers hold. We do that in this section by exploring what participants in our focus groups told us about their knowledge and awareness of dynamic pricing, their high level attitudes towards its use, and how that differs across sectors. We also briefly present findings about how dynamic pricing can affect consumer behaviour.

Consumers have limited understanding of dynamic pricing and initial sentiment is negative

Many participants in the focus groups had an awareness that some businesses use dynamic pricing, but understanding of dynamic pricing was limited. Many were uncertain about what it entails, which is unsurprising given the varied ways it is applied across industries. Airlines adjust ticket prices based on demand and timing, ride-hailing services implement surge pricing during peak hours, and hotels modify rates based on occupancy. Additionally, the distinction between dynamic pricing and other methods of price discrimination like peak and off-peak pricing or advance booking is often unclear.  

In our focus groups, participants frequently struggled to differentiate dynamic pricing from more traditional pricing strategies. This confusion is evident in the quote below, where consumers conflate dynamic pricing with these more familiar models.

“ I remember I joined the website quite early to kind of ensure that I'd get the tickets but they were doing this thing where they were only kind of showing you the most expensive ones, like the premium type of price tickets.”

We found that people often held an initial pessimism towards dynamic pricing. In part this was because awareness is largely shaped by media coverage which tends to focus on the negative aspects. However, the pessimism also came from consumers' personal experiences, as illustrated by one consumer: 

Several participants in our research instinctively described dynamic price changes as greedy or disrespectful. Rather than viewing it as a system that can also benefit them, they see it as a strategy to exploit high demand, being designed solely to increase prices and maximise profits:

"It's just really unfair and as I said before it just feels like it's greed coming from the supplier."

"Feel a bit disrespectful to me as a consumer."

"I do think it's unfair but at the same time I'm not surprised because this is something that's been happening for years."

Greater knowledge can lead to more acceptance, but also frustration

Research participants who had a greater knowledge of what dynamic pricing tended to be more accepting of it.

 "I do understand dynamic pricing and I understand the need for it." 

"If you're a business you've got to make money."

These consumers were more likely to recognise the potential benefits of dynamic pricing, and to see it as a two-sided practice - one that can work in their favour, both financially and in terms of service efficiency.

The case study below illustrates this through the experience of a consumer who has encountered both the advantages and drawbacks of dynamic pricing.

Some participants expressed frustration with dynamic pricing, feeling as though they were at the mercy of fluctuating costs rather than making empowered purchasing decisions. This sense of disempowerment was even more pronounced when alternatives were limited—such as when using ride-hailing services late at night or during peak hours.

For instance, a consumer who is looking for a ride late at night but has limited to no alternative modes of transport means they feel they have no choice but to pay an inflated price. This is explained by one consumer:

“I have no choice but to buy it as they are the only company providing the service."

This perceived lack of agency can diminish consumer trust and satisfaction, reinforcing feelings of stress and frustration.

Awareness and acceptance differ across sectors

Acceptance of the use of dynamic pricing varied across markets. There was greater scepticism among participants for its use in event ticketing, but greater acceptance in ride-sharing and flights, see Table 1.

Table 1 - Different awareness and attitudes of dynamic pricing across sectors

Knowing prices are dynamic pricing can affect consumer behaviour

The focus groups revealed how awareness of dynamic pricing can affect consumer behaviour and create consumer harms. The knowledge that prices change dynamically can create an artificial sense of urgency. Individuals reported feeling a sense of pressure because of the fear of future price increases. They felt compelled to act quickly to "lock in" a deal and so made impulsive decisions. 

"I feel like there's a sense of urgency. To book it because that might be the best price that there is but there's sort of no way of knowing." 

"I'm often pressured to make that booking there and then because I don't know whether it's going to go up or down to the next moment."

Also, price increases of significant margins can shift purchases from considered decisions to impulsive ones, increasing the risk of a consumer spending more than they had intended and subsequently regretting their purchase. A respondent noted: 

“The £150 to £400 price increase meant that the transaction was no longer a choice, but more of an impulse buy.”

Fairness in dynamic pricing

The previous section showed that while consumers can hold negative views towards the use of dynamic pricing, these are often based on limited understanding and are not uniform. We have seen that while many consumers associate dynamic pricing with unfairness, others report positive experiences. The fact that attitudes vary across sectors indicates that the context and how dynamic pricing is presented to consumers matters. 

From the focus groups, we find four clear themes that matter to consumers: 

1. transparency; 
2. price predictability; 
3. how much choice customers have to pay a dynamic price; and, 
4. the distribution of benefits between a business and its customers.

We consider each of these in turn.

1. Transparency

Transparency is generally seen as necessary to establish fairness in business-consumer interactions. Lyons and Sugden argue that what that transparency must be is related to the ‘normal expectations’ of the relevant context, but the novelty of dynamic pricing means that social norms about its use are not yet established. Our research participants felt it was important that there is transparency that prices could change dynamically and about the rationale for price fluctuations. 

"If prices are subject to change, I think it’s fair as long as they tell you at the start."

 "If you're justifying the reason for this increase or decrease, as long as you keep transparency with consumers then it's fine."

When there is a lack of transparency, either because information is omitted or poorly communicated, consumers may feel misled or pressured into paying more than expected. By contrast, transparency helps empower consumers to make informed decisions. 

"If you know the prices are going to change you can decide if you want to carry on buying something."

However, while transparency is seen as important to consumers, it is insufficient to satisfy consumers' concerns, particularly if it only makes them more aware of these unfair price increases. Consumers don’t want just to be told they're being treated unfairly, they want a pricing practice which is fair.  

"It's kind of surface level, like you're telling me that I'm being ripped off but I'm still being ripped off."

“Why do I want to know if someone is ripping me off? I would rather not be ripped off.”

2. Price predictability

Whilst transparency that prices can change, and why, is important to consumers, it is not sufficient. Consumers in our focus groups expressed a desire to have predictability in the amount by which a price might change. 

"I don’t really want to know why the prices change; I just want them to stay predictable, at least within a range I can afford."

Therefore price predictability can complement transparency by providing consumers with a sense of control. By contrast, if prices aren’t predictable consumers may end up paying more than they would have wanted to or being suddenly priced out of making a purchase.  

"If the price suddenly goes up you're preventing people from going who would have been reasonably under the assumption that they could have afforded it but now they can't."

One example where this lack of predictability becomes more pronounced is in the introduction of queues within the purchasing journey. Queuing systems are particularly prominent within the events sector where ticket release policies are often designed to stoke demand and can lead to fans spending hours on a website waiting to purchase tickets. Participants expressed particular unhappiness with cases in which prices changed after they had joined a queue or thought they had secured a price for a service. In circumstances like these, people indicated a deep sense of unfairness because they felt frustrated and exploited.

"I booked it but then it seems the price had gone up so nobody would accept my ride and it was driving me insane. I had to cancel the ride and rebook and pay the increased price."

In-queue price increases were perceived as particularly egregious because of the time already invested and the random nature of the price offered. The time spent waiting can even act as a sunk cost, encouraging consumers to increase the price they would be willing to pay and causing them to pay more than they intended. 

"It's kind of railroading because you already are so far down the process that you'll be less likely to kind of push back against it. It's almost trying to force you into paying a higher price than otherwise would be."

These queues are often out of the consumers control and in most cases it is unclear how these places are allocated and how this then impacts the price consumers pay. 

"The line, maybe five minutes before that time, everyone gets put in a queue, you can't really control where your place is in that queue sometimes. So why should you pay more for it? Just because you've been placed further down the queue it's not your fault."

Participants spontaneously felt the need to suggest remedies to address this unfairness. They variously proposed fixing prices for a period of time or capping the amount by which a price can vary. 

“Once you are in a queue it should be fixed like when you put something in your basket it’s fixed for a time."

3. Choice over whether to pay a dynamic price

When consumers feel that they have no meaningful alternative to paying a high price that has been set dynamic pricing, they are more likely to view a company’s behavior as exploitative and opportunistic. The perception that a company is taking advantage of limited options to increase profits at the consumer’s expense creates frustration and resentment. The sense of exploitation is particularly strong when consumers feel that the company is leveraging scarcity or urgency to push them toward more expensive or premium options. As one participant explained:

“They [companies] exploit people in situations where they [consumers] have no options or choices.”

Another participant highlighted the loss of control that comes with a lack of choice:

“If you don't have a choice, then that deprives you of your control doing something, which I think is the problem.”

Ultimately, a consumer’s lack of agency over whether they can avoid dynamically priced options creates a sense of powerlessness and undermines trust in the market.

At the same time, participants acknowledged that dynamic pricing can offer opportunities to secure lower prices, if consumers are equipped to take advantage of it. Some believed they had personally benefited, particularly when booking flights, but recognised that this required flexibility and strategic purchasing.

“Yeah, I think, over time you understand how these algorithms work. And… I have somehow managed to always get the algorithm to work in my favour.”

"I really benefited from that and I quite enjoyed the dynamic pricing when I could be flexible."

However, for those with limited flexibility, such as families constrained by school holidays, dynamic pricing often led to higher costs without any ability to adjust their behaviour.

"I work in a school and have a son so have to go away in school holidays and pay more, so it is one of those things about dynamic pricing."

This contrast between those who are able to “play the system” and those who cannot, highlights the uneven effects of dynamic pricing. When access to comparison tools, real-time pricing insights, or flexible purchasing is restricted, consumers are less likely to benefit, reinforcing a sense of unfairness in the market.

4. Benefits to both sides of the market

For participants in our focus groups, the fairness of dynamic pricing was often shaped by their perception of how benefits are distributed - does it offer advantages to both consumers and businesses, or does it primarily benefit businesses? Typically, dynamic pricing is perceived as unfair when it feels exploitative, particularly when price increases appear arbitrary rather than linked to a meaningful rationale. As one consumer expressed:

"If it's £100 and then suddenly because there's a huge amount of people that want to buy a ticket it increases."

However, some participants acknowledged that in certain cases, higher demand can justify higher prices, similar to an auction model where scarcity increases value. In these scenarios, consumers may accept paying more if they believe the pricing reflects genuine market dynamics rather than artificial inflation.

For dynamic pricing to be perceived as fair, consumers need to see a clear rationale and a balance in how prices move. This doesn’t necessarily mean lower prices, but when prices rise, consumers expect it to serve a broader purpose - such as improving availability or service quality - rather than simply maximising business profits.

Some research participants identified situations where dynamic pricing could benefit consumers. One example was airline pricing, where fluctuating prices were seen as necessary to maintain services, in contrast to the experience of event ticketing:

"I think that if there are a lot of empty seats on the flight it's a waste, so I do understand the business - they need to make money. It's not the same for tickets."

This highlights an important distinction - in some markets, dynamic pricing allows for both upward and downward price movement. With airline tickets, consumers might secure lower prices by booking at the right time. However, in event ticketing, prices typically only increase, reinforcing a sense of unfairness.

Another example where dynamic pricing was perceived positively was in reducing waste:

"So on the app, I am passionate about stopping food waste, and they use dynamic pricing. The closer to the time, the closer it [the cost] comes right down."

Participants particularly struggled to see benefits for consumers in event ticketing, where the marketplace can be confusing. Instead of feeling like a fair system, the process was perceived as a race to secure reasonable prices before they spiked. Combined with concerns that neither consumers nor performers benefit, this reinforced the belief that pricing gains were unfairly distributed.

"It's just weird, because I always see—how much of this is really going to the performers? It's going to the fat cats above them."

These frustrations were exacerbated when consumers felt they were paying more for the same service. This was especially true for concert tickets, where tiered pricing already exists. Raising the cost of identical tickets due to demand felt unfair, particularly when compared to retail pricing models:

"When you go to a shop and buy something, it doesn't just go, ‘Oh sorry, these are the last three, so we're going to sell them for double the price.’"

Discussion and recommendations

Our qualitative research has identified four factors that affect whether consumers consider dynamic pricing to be fair. These four factors represent aspects of both procedural and distributional fairness and the research shows that both of these are important to whether consumers feel the use of dynamic pricing is fair.

Procedural fairness refers to a firm’s conduct and the way in which it treats its customers, and UK consumer law places some obligations on firms to act fairly as there is a strong relationship between how firms treat their customers and the likelihood of them suffering harm. For example, if retailers dishonestly exaggerate sale discounts then it is unfair and will cause harm because it will likely mislead customers to purchase more of a product than they otherwise would have.

Consumer protections should ensure that firms provide a basic level of transparency, however it is possible for a business to be compliant with consumer law and still use dynamic pricing strategies in ways that consumers would find deeply unfair. Our research found that consumers want transparency not just about the use of dynamic pricing but also the rationale for price fluctuations, and they also want predictability about the price they will have to pay. It was felt to be particularly egregious that prices could change after a customer had started a transaction, and the propensity for consumer harm in such situations is likely to be high because consumers are compelled to make an impulsive buying decision when prices change mid-transaction. 

Which? believes that UK consumer law would need to be updated to ensure that the conduct of firms using dynamic pricing is procedurally fair. We think the intervention that would prevent the most egregious way in which dynamic pricing could be used would be to ban the use of dynamic pricing to increase the price of a product during the transaction process. This could be done by adding it to Schedule 20 of the Digital Markets, Competition and Consumer Act (DMCCA) 2024 (the ‘banned practice list’). The Australian government intends to implement such a ban and it would also be consistent with the advice of the Belgian Competition Authority. 

The other two factors identified in the research relate to distributional fairness. Typically, discussions of price discrimination and distributional fairness tend to focus on which consumers pay more, and this does emerge as an important factor in our research. People were more accepting of dynamic pricing when they believed people had a choice about whether to pay higher, dynamic prices. The ability to avoid higher prices will depend on the extent to which a good or service is considered essential and the market power of the firm using dynamic pricing. If a business has a large share of the market supply or if many firms in the market use dynamic pricing then it will be harder for consumers to purchase elsewhere. Further, consumers will vary in their ability to exercise choice about whether to pay a price set dynamically, perhaps by choosing to use a service at a later time, and it seems likely that consumers with characteristics of vulnerability will be less able. For example, research has found that consumers with disabilities are less likely to have flexibility in their purchasing decisions, while not all consumers will have the ability to shop strategically in online markets. There is a greater imperative for regulatory intervention when price discrimination leads to worse outcomes for vulnerable consumers. 

The other factor that people felt mattered for fairness was whether the dynamic pricing only benefits the business. In general this will be more likely when the firm using dynamic pricing is subject to weak competitive pressures or where supply is unresponsive to the change in price. This may in part explain the differing sentiment to the use of dynamic pricing in rideshares and event ticketing. For rideshares, consumers can typically choose from a range of companies offering taxi services and surge pricing should increase supply by encouraging more drivers to be on the road. By contrast, tickets for a given event are typically sold by a small number of distributors and higher prices do not increase the stock of tickets. Worse, for events that sell out quickly consumers are unlikely to be able to shop around ticketsellers.

Given all this, any intervention to address distributional unfairness arising from the use of dynamic pricing would ideally be sector specific, and specific analyses of the circumstances would need to be undertaken. The factors to be explored should include, but not be limited to: whether a good or service is considered essential, the market power of the firm(s) using dynamic pricing, which consumer groups are paying higher prices, and the extent to which these consumers can exercise choice so that their purchase decisions represent willingness to pay and not an inability to avoid. 

Overall, the research demonstrates that consumers hold nuanced views about the use of dynamic pricing. They do not see dynamic price as inherently unfair to consumers, but that it is considered unfair in certain circumstances. Some of the factors that determine this are unique to dynamic pricing and demonstrate that it may be necessary for the government to update consumer law to ensure it remains appropriate for new and developing pricing practices.