The $10 minibar beer is no basis for capitalism

Discussion in 'General Discussion | Travel' started by sobore, Jul 6, 2011.  |  Print Topic

  1. sobore
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    sobore Gold Member

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    http://www.ft.com/cms/s/0/0e2bcd24-a737-11e0-b6d4-00144feabdc0.html?ftcamp=rss#axzz1RK6lJpk4

    If you plan to fly with a low-cost airline this summer, you will have discovered that the final bill was not so low cost after all. Additional charges, not just for baggage but for payment and even for checking in, have prompted a super complaint from the UK consumer organisation Which? and spurred the Office of Fair Trading into action.

    And have you struggled to understand your mobile phone bill? Bought a cartridge of ink that costs almost as much as the printer? Do you fill in your personal details on an insurance comparison website every year, or just accept uncompetitive renewal terms? Have you used the internet or the minibar in a hotel, or watched the teaser offer on a mortgage revert to a standard variable rate?

    Products are complex, and time is scarce. Consumers focus on a few headline prices and features when they make their choices and so competition is focused on those headline prices and features. Economics 101 teaches that markets work best when competition leads to prices in line with costs, but in markets like these, competition has the opposite effect. Producers do not necessarily make excessive profits overall because the prices of key features are forced down to uneconomic levels. No one can really give you a free mobile handset, or fly you to Bratislava for 99p.
     
    wheat27, TRAVELSIG and JohnDeere19 like this.
  2. TRAVELSIG
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    TRAVELSIG Gold Member

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    Great article- and interesting subject.
     
    wheat27 likes this.

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