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Amazon's accidental price discrimination

When I was in college, a group of white students decided to hold a bake sale on campus and sell cupcakes for $1 to white students, and for $5 to students of color.

The bake sale was obviously controversial, and received an outpouring of complaints from both white and minority students. But the student group that held the bake sale said they were making a point about the unfairness of programs like affirmative action, which work in favor of minority groups that tend to suffer from discrimination.

The effectiveness and fairness of programs like affirmative action are important to discuss, but an editorial in the student newspaper later went on to say that the white student's group experimental bake sale was not comparing apples to apples. There's a huge difference between offering a program to underrepresented groups with a history of discrimination, and using price discrimination to sell goods at different prices based on race.

And here's where Amazon's accidental price discrimination comes in, which was spotted by the fine folks over at Freakonomics.

A few shoppers looking for a "Fisher-Price My First Dollhouse" toy on Amazon have discovered that there is more than a $25 price difference between a "Caucasian Family" dollhouse, and an "Africa-American Family" dollhouse, with the latter priced at $37.99 and the former priced at $63.49.

Upon further investigation, it turns out that the lower-price African-American Family dollhouse is sold directly by Amazon, which is known to discount its wares, while the Caucasian Family dollhouse is being sold through Amazon via a third party seller. The result is accidental price discrimination, and shoppers, like the students at my college, aren't happy about it. Other's have used the pricing to their advantage. Here's a review by a buyer named "rewrife":


If you want the Caucasian Family Dollhouse you can buy this one and buy the individual whites kids cheaper than buying the Caucasian version. Plus you'll end up with an over sized interracial family all living in same home and pretend it's the kids from the TV show "The Facts of Life" or "Different Strokes".

It could also be simple supply and demand — Amazon ran out of Caucasian Family dollhouses so a third party seller is offering their supply to shoppers. And as we all know, if something has higher demand, it tends to cost more, like these sweaters from J. Crew which offers a discount on certain colors:




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