4 ms·
I've just never understood this idea of forced price discrimination, the idea that consumers are restricted in buying a product freely available.
by supercanuck 12y ago
I've just never understood this idea of forced price discrimination, the idea that consumers are restricted in buying a product freely available.
- saryant 12y agoAirfares aren't priced on a cost-plus basis, they're priced based on what the markets will bear. For instance, MKE-BOS has no non-stop options, so lots of airlines compete for one-stop business funneling passengers through their hubs. This drives down prices. Compare this to ORD-BOS, which only has a few non-stop options. Those non-stop carriers (United, American and JetBlue) can charge a premium compared to, say, Delta, which can only offer one-stop options. Passengers in captive hubs looking at monopoly routes (Houston, Detroit, Atlanta) have it even worse when looking for non-stop routes. So a traveler looking to buy ORD-BOS will see high prices on the non-stops. I frankly don't see the problem here—almost every product is priced based on what the market will bear rather than cost+margin.