Quantitative indicators of price discrimination in the market of retail deposits
Price discrimination is referred to differential pricing for goods or services for different groups of consumers, when the price difference is not explained by difference in the marginal cost of production or sale. By using price discrimination the seller receives a different level of profitability on the sale of the same goods or provision of similar services to different groups of consumers.To use price discrimination in practice the following organizational and economic conditions are required: market power, segmentation and restriction of arbitrage opportunities. Market of retail deposits is a typical example of the use of price discrimination. Commercial banks in many countries set different interest rates on time deposits, based on the amount of the deposit, the depositor's age and level of complexity of customer service. To measure price discrimination used by the bank in pricing of deposits can be used the following indicators: - P1: the absolute difference between the maximum and minimum interest rates, - P2: the relative difference between the maximum and minimum interest rates, - P3: the standard deviation of interest rates from the average interest rate, - P4: the ratio of the standard deviation of interest rates from the mean to the average interest rate, - P5: coefficient of non-uniform distribution of interest rates. Despite the fact that each of these indicators identifies the existence of differentiated interest rates, they have certain advantages and disadvantagesfor the purpose of comparing the degree of discrimination. We have reviewed the structure of interest rates on time deposits of the thirty largest Russian banks as of January 1, 2014 the share of these banks account for over 78% of all time deposits in the banking system, and their office networks spread throughout Russia. On the example of the considered sample of bank deposits various indices of price discrimination were calculated. For all indicators tend to mismatch average and median values, suggesting that the left-sided skewness of their distributions. In particular, it should be noted that 31% of the banks have not used price discrimination. Most indicators have similar characteristics (P2-P4), which can be explained by the presence in the numerator standard deviation of deposit rates. Indicators of absolute differences and variations in interest rates have a greater range of values in contrast to indicator ofnon-uniformdistribution.To test how closely related indicators of price discrimination, we used Spearman and Kendall rank correlation coefficients. Econometric analysis of pricing policy of commercial banks can produce different results depending on what indicator is used. At the same time, all the values of the coefficients of rank correlation between these indicators exceed 0.5, and tests show the statistical significance of their correlation. Therefore, to obtain the least conflicting research results and practical conclusions and recommendations to commercial banks is advisable to use multiple indicators of price discrimination.