Thursday, May 27, 2010

Monopoly = 1 firm and Confusopoly = ?

Over at Economists Do it With Models (ECDIWM) a recent post attempts to explain why airline prices move around so much and why there are so many little fees (checked baggage, sodas, pillows ect.).


I need to buy airline tickets this week. We'll be traveling with my 6 month old daughter so we'll be checking luggage. I don't have time to check out each companies' luggage policy.

I agree with ECDIWM that part of the little fees is to separate types of customers and get increased profits. If I don't check bags and don't drink soda the ticket may even be cheaper for me. But I'm wondering at what point it becomes too hard to compare airlines if they have prices for several different parts of the trip.

This makes me think of a term Scott Adams the writer of the comic strip Dilbert coined a few years ago.

Confusopoly --"a group of companies with similar products who intentionally confuse customers instead of competing on price"

Luckily the Internet is on our side. Will it be long before travel search sites like kayak allow you to compute costs based on the number of bags you would check and sodas you would drink.


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4 comments:

Dan R. said...

Bookmark this page: http://www.airfarewatchdog.com/blog/3801089/airline-baggage-fees-chart/

Economists Do It With Models said...

If restaurants acted in this way...

http://valuingeconomics.blogspot.com/2010/06/menu-costs.html

:)

Button Fuzz said...

Great post. Part of the extra fees can be to defeat corporate programs designed to mandate lowest fare travel. If you can make extra fees invisible to the compliance programs you win.

Button Fuzz said...

Great post. Part of the extra fees can be to defeat corporate programs designed to mandate lowest fare travel. If you can make extra fees invisible to the compliance programs you win.