Do Prices Come Down?

[HeavyDrinker]

One day you might figure it out.

Din't really want to or need to.

Can your mate provide the facts?

No he can't

so TAWP (Probably some really shitty acronym anyway)

I take this lame abuse as a sign of defeat.

[HeavyDrinker]

. One day you might figure it out.

I don;'t really care. You nor your mate can do what I asked.

Silly names or not, I am right.

[HeavyDrinker]

Oh yeah you double posting GOD you!

[samran]

Generally yes, and quite substantially.

We stayed in a pool villa at the sheraton(?) I think it was on Koh Chang for 1500/night during the low season where the normal rate was in the 8000/night range.

Novotel in Chumporn on our great BKK to KL road adventure had some great deals outside the Songkran break. Go for basically any decent hotel and you'll get these deals across the country.

A range of places in Phuket as well, mostly where there is a definite low season affected by the weather, and you'll get great deals.

On the other hand, I guess if you are within spitting distance of, ahem, "entertainment venues" that tend to charge by the hour or some country bumkin run accommodations then you may see all sorts of pricing that may defy the laws of economics.

[gregb]

As an example of the Thai tendency to raise prices when revenue is falling, the motorbike queue near my house recently upped its rates for travel in the soi from 10 baht to 20 baht. I asked a driver I've spoken with on several occasions why. He was honest and told me that passenger trips were down while their own personal living expenses were up and they could no longer afford to do it for 10 baht.

Yes, this is twisted logic, but it is Thai logic. Thais will raise prices when business drops off if they don't feel there is competition for their services, or if they feel they have no other options for staying in business. They generally don't have the money to experiment with lowering prices to see if sales increase. In any Western economy presented with this problem, the number of drivers would simply have been reduced to match the new reality on the ground.

Like anything else, there are those Thais that understand the theory behind competition and supply and demand, and there are those who believe they are entitled to charge whatever they want and the community is obliged to give it to them. This belief has its roots in the patronage society that the Thai culture originated from, as well as the generally poor level of education.

A group like the motorcycle queue will not accept that the problem is too many drivers. In their own minds the community is obliged to give them what they ask for simply because they believe it to be so. And if more people start walking or decide to buy their own motorcycle due to the increased rates, I will bet the price will go up again.

Fare reductions to increase volume will never be part of their solution to the problem.

[samran]

As an example of the Thai tendency to raise prices when revenue is falling, the motorbike queue near my house recently upped its rates for travel in the soi from 10 baht to 20 baht. I asked a driver I've spoken with on several occasions why. He was honest and told me that passenger trips were down while their own personal living expenses were up and they could no longer afford to do it for 10 baht.

Yes, this is twisted logic, but it is Thai logic. Thais will raise prices when business drops off if they don't feel there is competition for their services, or if they feel they have no other options for staying in business. They generally don't have the money to experiment with lowering prices to see if sales increase. In any Western economy presented with this problem, the number of drivers would simply have been reduced to match the new reality on the ground.

Like anything else, there are those Thais that understand the theory behind competition and supply and demand, and there are those who believe they are entitled to charge whatever they want and the community is obliged to give it to them. This belief has its roots in the patronage society that the Thai culture originated from, as well as the generally poor level of education.

A group like the motorcycle queue will not accept that the problem is too many drivers. In their own minds the community is obliged to give them what they ask for simply because they believe it to be so. And if more people start walking or decide to buy their own motorcycle due to the increased rates, I will bet the price will go up again.

Fare reductions to increase volume will never be part of their solution to the problem.

Well, in my book, the motorcycle drivers basically are doing the logical economic thing.

They have a monopoly on their soi, so they can raise prices if they so wish.

The (monetary) barriers to entry to alternate modes of transport are relatively high (buy your own motorbike, take a taxi). So are non monetary alternatives (walk, and be drenched in your work clothes by the time you get to work). Not to mention the time value of money.

They are profit maximisers with a custom base who has a relatively inelastic level of demand.

Not that people think about these things explicitly, but that is what is happening if you break it down.

Good try at trying to link it with a theory of Thai feudal thinking, but in my book it is classic 1st year economics stuff.

Edited February 6, 2011 by samran