Firms are also making bigger profits by charging poorer exchange rates to travellers who live outside London or travel from cheap-flight airports.
Competition lowers prices for consumers in well served markets. Few suppliers leads to higher prices for consumers.
My word, it\’s as if someone needs to invent a science to study this strange phenomenon.
To be fair to the article, it’s actually pointing out individual companies charge different rates depending on location. No doubt it makes perfect economic sense that they’ll take advantage of absence of competition but it goes against the grain of what the customer usually expects of multi outlet chains. You don’t usually find the price of shoes changing depending where the branch of the shoe shop is.
On a wider point, shopping’s just practical economics for dummies, isn’t it? But it’s hard to make rational economic decisions when portions of the information needed to do so are deliberately obscured. The Mail, on loading travel pre-load cards says “But Virgin Money, for example, charges £2.80 more for £100 at weekends” Virgin’s response was according to the Mail ” ‘The price is transparent and is made available to the customer before they load their card,’ says a spokesman for Virgin Money.”
Took the time to download Virgin’s 8 page .pdf & couldn’t find mention of that anywhere. Mail’s got it wrong or Virgin not being transparent? What I did find was the card’s not valid for self service fuel pumps. Page 2 item 5.4.2 Now that’d come as a surprise at 3am in the middle of nowhere. For me, using a pre-paid card for gas would be why I had it. The safeguard of knowing if the card gets scammed, the limit of exposure is the balance on the card.
In the GP’s waiting room this morning I glanced at a copy of Oxford Today. It carried a letter from someone describing himself as a former Treasury mandarin, offering generalised economic advice to the nation. Alas, he misused the term ‘comparative advantage’: so much for economic science.
Tim: Guido is attacking the smurphmeister.
http://order-order.com/2012/08/15/more-magic-money-tree-madness/#comments
Bloke in spain>
“You don’t usually find the price of shoes changing depending where the branch of the shoe shop is.”
Er, yes you do. All the time. People don’t usually shop in two very differently located branches of the same shop, of course.
We regularly see quite different prices – usually in terms of bogofs and other special offers – at the Sainsbury across the road from us and at the (much) bigger one about 8 miles away that we shop at a couple of times a week.
Where I live at least, *McDonalds* outlets charge differently (not hugely, in the order of 20 cents or so per meal) in different parts of town.
Bloke in Spain, Er, why wouldn’t you expect different prices in different locations, regardless of whether they’re part of an (inter)national chain or not?
Surely, one would expect varying prices roughly according to costs of rents and labour, and relative popularity/competition in a given territory?
In fact, even ITV’s Tonight did a stating-the-bleedin’-obvious doc on it the other week: http://www.itv.com/news/2012-08-02/divided-britain-tonight-itv1-at-7-30pm/
bloke in spain said:
“Took the time to download Virgin’s 8 page .pdf & couldn’t find mention of that anywhere. Mail’s got it wrong or Virgin not being transparent?”
What they probably mean is the cost is show to the customer on screen before they complete the transaction. Like some online shops where you can’t find out the shipping cost until you start the checkout process.
“My word, it’s as if someone needs to invent a science to study this strange phenomenon.”
Science? LOL – you’re bigging up your hobby a little too much methinks.
Anyone who buys johnny foreign money at an airport counter is getting hugely ripped off anyway.
Bloke in spain, try shopping at Smiths in a major transport hub..
Thanks for all your advice but I did say usually.
And the point was, the Mail was drawing attention to the pricing difference which many of its readers won’t be aware of. Of course it’s economics, as Tim points out, but how many understand economics?
“What they probably mean is the cost is show to the customer on screen before they complete the transaction.”
Which is one of the things pisses me most. And is not uncommon. You’ve contracted for a service & then find there’s other conditions imposed afterwards.
http://travelmoney.moneysavingexpert.com/