Pricing Strategy Of Differentiation In Prices Between Men And Women
The differentiation in the price of tickets for men and women at parties and events is considered common practice throughout the United States and the world. Differentiation usually occurs at lower prices, and in addition to charging men higher prices than women, can include practices like offering free admission until certain times for a specific audience.
By analyzing this pricing strategy from the entrepreneur’s standpoint, one can see that his business operation does not come from feelings of sexism or machismo, but rather is a rational response to economic incentives. In offering discounted prices for women, firms can provide the public with venues that have more women present than their non-differentiating counterparts, and these women then attract men in pursuit, creating a festive atmosphere with a large attendance. This type of practice is similar to the so-called two-sided market economy, a concept that emerged within the last decade and whose chief pioneer, Jean Tirole, secured the Nobel Prize in 2014. This theory is currently among the more discussed in service industries today since it largely explains the economic logic behind digital platforms such as AirBnB and Lyft. The idea is the value for a group of users on one side of the platform is positively related to the number of users on the other side, and vice versa, meaning there is an interdependence that creates positive effects for the two groups of users. These are called indirect net positive effects. In real estate rental platforms, for example, tenants benefit from a larger number of landlords, who also gain from having a large pool of prospective renters; the same holds for the relationship between drivers and passengers in transport service platforms. There are also examples in more traditional sectors of the economy like credit card use in brick-and-mortar stores. If more shopkeepers accept credit cards as a valid form of payment, it will be more convenient for customers to shop at their store, and the stores will in turn benefit from increased sales. The acceptance of credit cards can form a positive feedback loop that benefits both buyers and sellers.
This feedback loop can be stimulated depending on how the platform sets prices between the two groups of users. Consider when there is too much demand for Uber rides, and too little supply of Uber drivers. The surge pricing mechanism then kicks in, which incentivizes drivers to begin working to alleviate a temporary shortage, allowing for more Uber rides to be completed at a lower price due to the increase in driver supply. In this example, price alterations help the market return to its optimal level of operation where total surplus is maximized. This same logic can be applied to parties and events where prices are differentiated for men and women. Commercial establishments in the leisure and entertainment sector, such as nightclubs and bars, are platforms that enable the interaction of men and women predicated on the idea that the majority of the public is heterosexual. With such circumstances, the ultimate objective of the entrepreneur would be to facilitate the matching of men and women in his venue to cater to the core human desire of romantic satisfaction. This is a classic two-sided market case in the economic literature, where the two categories of users on either side of the platform are men and women who can pay different prices for their respective inputs.
From the economic perspective of a business owner, the presence of women in an establishment carries a positive externality because they will attract men who will in turn pay an entry fee and spend money on drinks and food inside. A prudent business decision would be to subsidize women because of this externality, which is precisely what the price discount is aiming to do. Conversely, a smart businessman also realizes that the presence of too many men in his venue is undesirable and carries a negative externality, and so he will “tax, ” or charge more, for men to make sure that his establishment operates with an optimal gender ratio. Straight men generally benefit from a higher female percentage in a venue, and straight women benefit from a balanced number of men at establishments. Just as with Uber, variable market prices for entry among men and women allows for the most efficient gender balance to be reached that maximizes producer and consumer surplus. The same idea applies in the online dating world. If online dating apps have a strong gender imbalance either way among their users, the dating market will correct itself due to the innate, romantic desires of humans. Too many women on the platform will attract men in pursuit, and if the balance sways too far past equilibrium, either more women will join to take advantage of the abundance of male dating options, or men will drop out if they are having no luck in a dating market oversaturated with males. When thinking about differentiation in this context, one can see that not only does it contribute to profit-maximization in a firm, but it also allows for an efficient allocation of resources and a better way of matching people who can satisfy each other’s wants. LAWA legal analysis of this practice provides mixed results. While the described practices are made primarily in search of profit-maximization, the law also necessitates an adherence to statutes that bar discrimination and unequal treatment of patrons. Because consumers operate in the framework than an entrepreneur has created, their bargaining power is limited in these contexts. In this way, the legal justification for entrepreneurs to implement price differentiation is primarily due to the principle of free initiative since businesses are private entities and events take place on private property. Because private firms are not financed by the State, it is up to the business entity to establish its price and discount policy (and even free distribution of income if it so wishes), and they can choose to affirm that this type of differentiation seeks to promote women, especially since in many cases they are subjugated in society by receiving lower wages and less social prestige.
While the legal arguments of entrepreneurs make logical sense, they cannot be used as a shield to justify abusive practices, such as treating people unequally and devaluing the image of women by reduce them solely to a product with a purpose. To argue against this practice, one must start with the principle of equality and isonomy ingrained as core values in the constitutions of many democratic countries. These declarations state that men and women are equal in rights and obligations such that any unequal treatment between the sexes is considered a constitutional violation. In a legal sense, however, it is accepted that certain privileges should be established for consumers when they need special protection. This includes cases of the elderly, pregnant women, and children in order to follow the correct application of the principle of equality and to minimize the differences in outcomes between different people. In the eyes of the constitution, it is not conceivable that parties, shows and other cultural events can bar entry to or have varied prices for attendees on the basis of gender, skin color, nationality, or even physical size. It is clear that such a practice is discriminatory and violates the constitutional principles of equality and dignity of the people. Interestingly, constitutional violations of equality do not lie in the criteria chosen for discrimination, but rather the justification for the discrimination. A party, for example, cannot charge separate prices based on ethnicity on the fallacious assumption that women of a certain skin or eye color can attract more men to the party. It is reasonable, however, that a film studio that is producing a documentary on medieval Sweden would choose a white actress over a black one. In these cases, the criteria for differentiation is the same – that is, color of the skin – changing only the legitimacy of the justification, which consequently alters the constitutionality of differentiation. In order to be a legitimate form of differentiation, there are two conditions that must be met: first, the factor of discretion must maintain a logical, tenable connection with the objectives of the business or operation, and second, this justification must pass constitutional muster. If these two conditions are followed, we are all treated equally under the law, and any special pricing initiative or other form of differentiation that is not explicitly in the interests of the public good is considered an injustice and cannot not be practiced.
What then defines the legitimacy of a given type of differentiation is the constitutional protections of valid reasons to differentiate. The justification for charging women less, for example, results in a higher attendance of women, which makes parties more attractive for heterosexual men. As a result, the host of the event profits more, allowing one to make a rational, economic case case for differentiation that has no basis in discriminatory sentiments. It is thus not logically consistent to claim that the reason for price differentiation is to promote the inclusion of women in the social sector by bars and parties. Movie theaters and museums do not engage in tiered pricing for different genders to promote the attendance of more women; this practice occurs only in events where the presence of women attracts male audience, such as parties and shows.
It is obvious then that the reason venues offer lower prices for women is to attract more male attendees. The legal problem lies in the fact that if this larger presence of men carries enough of an economic benefit, this differentiation can be extended to discrimination based off of innate attributes such as race and age. This could be a slippery slope that would result in things like barring potential patrons entry to a venue because they don’t fit the proper "profile. ” Overweight people, for example, who do not fit the beauty standards imposed by the establishment may have their access restricted. This is because the economic logic behind this form of discrimination and price discrimination between men and women is exactly the same: to artificially influence the public attending the party in order to attract more heterosexual men, so that the purpose of differentiation is the it. As stated, the constitutionality of a differentiation practice is not determined by the criteria used but rather the logical relationship between this criteria and a legally permissible purpose. If the commercial justification of attracting more customers to the party is a constitutionally protected purpose, then this legal basis could be a platform for more widespread discrimination. This could include charging cheaper prices for women of up to 20 years, women of a certain ethnic group, women with little clothes, thin people, and "interesting" people–this precedent would open to door to numerous forms of discrimination provided that it serves a commercial, profit-maximizing purpose.
The discrimination by sex and the other obviously violates the Constitution and demands judicial intervention into private business operations since the principle of free initiative cannot be used as a guise to unfairly discriminate against others. There are indeed important precedents in the United States of America, such as the California Supreme Court ruling in Koire v. Metro Car Wash, 707 P. 2d 195 (CA 1985) that have decided cases very similar to this one with respect to granting discounts to women at parties and nightclubs. This practice, known as Ladies' Night, was deemed to be unlawful discrimination. It is worth noting that this ruling was in the United States, which has a culture that values free enterprise and laissez-faire economic policies in a way that other countries do not. The United Kingdom, the birthplace of both Adam Smith and the Industrial Revolution, likewise prohibits the practice of Ladies’ Night.
The differentiation in prices between men and women does not stand up in court due to clear violations of the constitutional principle of equality. In addition to this violation, the practice of differentiating prices of parties, shows and other events between men and women also violates the principle of the dignity of the human person, a foundation also protected by the constitution, because in these events women are treated as objects of a commercial practice of the establishment that performs the party or show. That is to say, they are treated as a means to a purpose, which in this case is pure profit.
In the Kantian perspective, human dignity consists precisely in the opposite, so that the human being must be an end in itself, never a means to reach another end, and is the subject of rights, not an object. Thus, the use of women to attract more men to the event is a clear violation of the dignity of women, since it uses it as another product to be offered to men–an input of business activity – so that this practice, under the false label of an advantage to women, ends up reinforcing misogynistic ideals of women’s inferiority.
Entrepreneurs justify the practice of differentiation by pointing out that women are already disadvantaged in the labor market, lack equal representation in high public positions, and earn lower wages than their male counterparts, and that because of this, the practice of charging women less would be a way of giving them some advantage. However, this pseudo-advantage to women actually strengthens their social devaluation, reinforcing the idea that they are inferior, and an object in the service of man. Women are used as another attraction of the party to be offered to men who are seen to be the true holders of social capital at parties. Importantly, we must not allow price variations for gender so that we do not introduce the possibility of other differentiations being made on the basis of race, physical attributes, or age. Even though people are largely free to engage in business agreements as they choose, they cannot be allowed to hide behind the law to engage in abusive, discriminatory practices that would undo decades of social progress we have undergone that has resulted in better, albeit not perfect, equality of opportunity and outcome.
