The Pink Tax: Price Discrimination, Product Differentiation, and Gender‐Based Pricing in Consumer Packaged Goods

ABSTRACT This paper examines the economic mechanisms underlying persistent price gaps between products marketed to women and men, which is often referred to as the “Pink Tax.” Using NielsenIQ scanner data on toothbrushes, we provide evidence of gendered price differentials and analyze two mechanisms central to the literature: gender‐based price discrimination and product differentiation. We first test for price discrimination by estimating own‐price elasticities and exploiting a natural experiment created by New York State's 2020 legislation banning gender‐based pricing. Our results show that women's products face significantly lower demand elasticities, and the policy intervention reduced but did not eliminate price gaps, consistent with price discrimination literature. We then estimate a structural model to recover marginal costs and markups. The results reveal that women's products are differentiated in ways that reduce substitution pressure, leading to higher markups despite lower marginal costs, which indicates that product differentiation sustains the persistent price disparities. Taken together, our findings show that price discrimination and product differentiation jointly determine gender‐based pricing outcomes and that regulatory efforts aimed at banning gender‐based price discrimination alone may have limited effectiveness when firms also rely on product differentiation to sustain markups.