> Things are priced at the point that one would pay.
No, things are priced at the point that the market, as a whole, is willing to pay. If you're someone with an above-median income, you're usually paying less than you otherwise would.
Most purchases you make don't start with the merchant checking how much money you have in your savings account.
>> Everything would be priced at the highest possible price that you'd still pay.
>That is almost always the case anyway. Things are priced at the point that one would pay.
No... not at all. When you need to fly home for a funeral of a close friend, suddenly plane tickets cost $10,000 for you and only you. Your neighbor could get the same flight for $200, but would not be allowed to transfer the ticket to you, because, well, them's the rules in a no-consumer-surplus world.
The vast, vast, vast majority of the time, most people are paying far less than the would pay for things if the companies they bought them from could use dynamic pricing. This is what the consumer surplus is, and is why markets generally worth for both consumer and seller.
> suddenly plane tickets cost $10,000 for you and only you. Your neighbor could get the same flight for $200
No? How can the neighbor get a different deal than one you are looking for in the case of plane tickets? It's not like the airline knows that you are flying for a funeral. Even if they did, as you mention in a non-surplus world, well, yeah, that's how markets work, people have different needs and pay for that privilege. There are business and first class tickets for a reason, as well as prices being more expensive during holidays and summers. Of all of the examples, you chose one of the worst as flight prices are inherently dynamic.
>How can the neighbor get a different deal than one you are looking for in the case of plane tickets?
This is literally how dynamic pricing works, and it happens all the time.
>It's not like the airline knows that you are flying for a funeral.
Yes, they could. A company armed with the biggest of big data could scrape that information fairly trivially. This is my entire point. The more companies know about us, they more they can use dynamic pricing to extract the highest price we'd probably be willing to pay... personally.
>There are business and first class tickets for a reason, as well as prices being more expensive during holidays and summers.
These are different products. Dynamic pricing is different pricing for the exact same product depending on the who the customer is... typically their demographics data.
Sure, but I'm pretty sure no airline does this currently. The fact that they could doesn't mean they do. And even if they did, there is no reason why they shouldn't, if one believes that surplus on either side of the market creates inefficiency.
No, things are priced at the point that the market, as a whole, is willing to pay. If you're someone with an above-median income, you're usually paying less than you otherwise would.
Most purchases you make don't start with the merchant checking how much money you have in your savings account.