Why Should Big Data-based Price Discrimination be Governed?

Abstract The e-commerce platform provides data service for resident merchants for precise marketing, but which also leads to frequent occurrence of big data-based price discrimination by merchants. To govern big data-based price discrimination, it is necessary to clarify the motivation. In this paper, by constructing a differential game model based on merchant reputation dynamics, the impact of big data-based price discrimination on the data service level, merchant reputation, consumer surplus and benefits of the platform and merchant are researched, the reason why it is difficult to govern big data-based price discrimination is analyzed, and relevant suggestions are put forward. The research shows that: based on revenue factors, the platform will not give up providing data service to the merchant because of merchant's big data-based price discrimination, while the merchant tend to adopt the big data-based price discrimination strategy in order to obtain additional income, which leads to generate a vicious closed loop that is difficult to eliminate big data-based price discrimination. To eliminate the vicious closed loop, third-party supervision should be introduced into the platform; compared with big data-based price discrimination, when precision marketing has a greater impact on reputation and demand, resident merchants tend to adopt a combination of precision marketing and big data-based price discrimination strategies. Therefore, the platform should provide appropriate data service levels for different industries, so as to avoid high-quality data service from becoming a tool for merchants to conduct big data-based price discrimination strategy; big data-based price discrimination will reduce the level of platform's data service, consumer surplus and platform profits, but the merchant's profits will increase significantly, so to curb the big data-based price discrimination, it is necessary to vigorously increase the punishment for the merchants.