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The airlines care because they are attempting to engage in price discrimination -- charging different prices for the same product to different people, roughly i
by fennecfoxen 12y ago
The airlines care because they are attempting to engage in price discrimination -- charging different prices for the same product to different people, roughly in line with these peoples' ability and willingness to pay.
It does feel dirty, but it's worth tempering that emotional evaluation with the knowledge that, in those places where two or more airlines are competing for customers, they are very competitive indeed, and tend to operate on razor-thin margins (sometimes even negative margins! Airline profitability has been a recurring problem for those who have attempted to invest in them as businesses.) A system which is more predictable and feels less exploitative may in fact end up substantially more expensive and less convenient for all fliers (especially those now buying the cheapest tickets) and less profitable for the airlines as well.
(In Econ 101 terms, this is to say that fare regulations would have the potential of making the market less efficient and creating a deadweight loss to society.)
- avz 12y agoI wonder whether this assessment of the market efficiency and benefits to society brought on by price discrimination would change if we account for the time and effort people spend on trying to game the system.