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Price discrimination by language: Field experimental evidence from a shopping mall

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  • Lee, Jungmin
  • Park, Sangkon

Abstract

To investigate whether foreign shoppers are discriminated against, we conduct a field experiment at a large shopping mall. We employ 56 female foreigners speaking 11 different languages and 7 Korean natives and collect data on total 2267 store visits. To test price discrimination based on differential search costs, we randomly select buyers to send a signal of lower search cost. Results show that negotiation and signaling induce sellers to lower their price offers. Our experimental findings, combined with auxiliary survey data from foreign visitors, suggest that sellers use the language of buyers as a proxy for the distribution of reservation values.

Suggested Citation

  • Lee, Jungmin & Park, Sangkon, 2019. "Price discrimination by language: Field experimental evidence from a shopping mall," International Journal of Industrial Organization, Elsevier, vol. 63(C), pages 69-98.
    • Handle: RePEc:eee:indorg:v:63:y:2019:i:c:p:69-98
    DOI: 10.1016/j.ijindorg.2018.07.004
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    More about this item

    Keywords

    Price discrimination; Language; Price negotiation; Haggling; Signaling; Willingness to pay; Field experiment;
    All these keywords.

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory

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