Markets and Taxi Cartels

During my first few days in Addis Ababa I was spending nearly 10 dollars a day on transportation. The price was ridiculous. That is the price of a whole day’s worth of delicious meals and macchiato breaks between each meal. I knew there was a market disparity because of my white skin, but could it have been so high? 10 dollars is what most Ethiopians make in a week, so there must be another way. I tried bargaining at taxi stands. However this quickly turned futile as the men quickly locked in on a price. Before I go on further about pricing, let me refresh you on a brief economics lesson on markets and prices.
In a free market, services are priced at a certain point. (Let’s say 10 for one taxi ride) At this price point providers of services enter the market ("I can make a weeks wages if I find just one foreigner, I'm in!!"). A flood of service people enter the market ("Looks like these guys all had the same idea, so much for the easy $10.") At this point there is more supply of service than demand and service providers must compete. Service providers can either compete on price or service ("These fools have dirty cars, I will have the cleanest and rake in all the customers." or "So much for my $10 lottery ticket, I will increase my chances if I lower my price to $9"). Those who can't provide a better service or lower price, can't compete, do not get the customers and leave the market (I'm going back to making a sure $10 a week verses waiting for the $10 lottery ticket that prefers cleaner cars and $9 rides"). Eventually the market achieves a state of equilibrium where there are just the right amount of services for the amount people are willing to make.
The scenario presupposes two things free markets and competitive forces. Two things that exist in abundance in the Western World I inhabit, but do not exactly work as such in other areas of the world. I should have remembered that men at taxi stands quickly apply cartel pricing when I start to apply competitive forces to achieve a price that is more fair. Cartel pricing is also called fixed pricing. If everybody locks in their heels on a price, then everyone will get richer. This is such an effective strategy for business, that governments around the world have strict laws forbidding cartel pricing.
Cartel pricing and competitive forces sounds rather academic. Here is how I imagine these two concepts sound.
"Listen Tagle, you can't park your taxi here at this taxi park because you cheated all of us by offering to drive the foreigner for $9. Get out of here, and you can't come to my birthday party either"
"I needed the $9 you guys. Since your nephew brought his taxi to our stand were are not seven at this stand it is getting crowded. 9$ was a lot better than my one in seven chance of getting $10."
"You sound like an economist, get out of here and teach a class."

The long and the short of it was that I was not going to pay wildly inflated prices. It wasn't so much a money thing as a being cheated because I am a foreigner thing. Some foreigners have experienced affluence guilt and pay inflated prices to assuage their feeling of good fortune. However, I know that I have a set amount to spend in a county. That money can either be spent on people providing services and products that are worthwhile or the money can be spent on cheats and over chargers. The charitable advantage to spending money on things that are worthwhile is that you encourage people doing work for money verses people waiting half the day at a taxi stand for the lotto ticket foreigner.