Identification of Direct Socio-Geographical Price Discrimination: An Empirical Study on iPhones

TL;DR

This study empirically investigates whether Apple practices socio-geographical price discrimination on iPhones, revealing significant price variations linked to market competition, income levels, and regional factors.

Contribution

It applies econometric analysis to identify socio-geographical price discrimination by Apple, providing empirical evidence of pricing strategies based on market and income disparities.

Findings

iPhones are more expensive where competition is weak

Prices are higher in developing countries and regions with high income inequality

Significant statistical evidence supports socio-geographical price discrimination

Abstract

Price discrimination is a practice where firms utilize varying sensitivities to prices among consumers to increase profits. The welfare effects of price discrimination are not agreed on among economists, but identification of such actions may contribute to our standing of firms' pricing behaviors. In this letter, I use econometric tools to analyze whether Apple Inc, one of the largest companies in the globe, is practicing price discrimination on the basis of socio-economical and geographical factors. My results indicate that iPhones are significantly (p $<$ 0.01) more expensive in markets where competitions are weak or where Apple has a strong market presence. Furthermore, iPhone prices are likely to increase (p $<$ 0.01) in developing countries/regions or markets with high income inequality.