Robot market and the perfect price

I remember from economics class how firms try to navigate pricing. On one side of the spectrum, if you negotiation with each and every customer, you will be able to get the perfect price for each customer. But this takes too long plus it all depends on the skill of the negotiator. So companies decide to set a standard price. This way companies don't have to train every sales rep in negotiation, plus they can conduct business quickly.
Imagine at the grocery store

Clerk: "One can of beans, four dollars."
You:"Four dollars, this is absurd. I will give you a quarter"
Clerk: "A quarter, no sir. That will not even cover the cost of the can those beans are in. A dollar, this is my best price"
You: "Ok a dollar."
Clerk: Scans beans and sends them down to the bags. Picks up other can of beans. "One can of beans, 5 dollars."
You: "Five dollars, you just sold me the identical one for a dollar"
Clerk: "Everyone knows you need two cans of beans to make anything."

This situation is absurd in a western style supermarket. Supermarkets make up for their lack of negotiating a perfect price for each item by volume.

But what if supermarkets could train a robot. A robot that is an expert negotiator and has an unlimited amount of time. Time and negotiation skills are the only two things that are keeping supermarkets from getting the perfect price.

I found the robot. And it is inside the ticket pricing of airline ticket sales.

As I was booking my flight to Portland. I stepped away from the computer to eat dinner. When I came back, the ticket price increased $100 dollars. I couldn't believe it. I saw red glowing letters in the lower corner, 2 seats left. I remembered this feeling from the markets of India. If you come back to a vendor, he knows you are desperate and can jack the price. But,how could the airlines know it was me coming back?
I logged out, then searched without logging in, to see if I could mask my identity. The price had jumped by another 50 dollars. This was getting ridiculous. I was feeling jerked around. I logged in via a virtual connection, so there was no way the airlines could trace my computer. The price was holding steady at 150 dollars above what I initially thought I was going to pay. I pulled up Amtrak and realized that their prices are a joke. I pulled up a driving map to Portland and realized I couldn't make it in time. I decided to sleep on it. The next morning I searched again and the price dropped back down to the original level I was set on.

I don't know what sort of robot I was negotiating with, but I dealt with it the same way I did the in markets of India. I just kept asking for the same price over and over again, refusing the answer I didn't want to hear.

Intercultural Tip: Specific cultural skills are not always culturally bound. Find ways to apply skills learned abroad in the new context back home.

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.