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The Kapali Carsi

Turks Don’t Like Differential Pricing

There is huge outrage at the recently-privatized Istanbul Seabuses (IDO) these days. Any Turkish newspaper usually has at least an article/column a day criticizing the company, which carries passengers and cars around Istanbul as well as to Bandirma and Bursa, the gateways to the Turkish riviera if you are traveling by car from Istanbul.

While some critiques are about poor customer service, most of the arrows are because of the company’s flexible pricing scheme– to the extent that the company had to backtrack somewhat: Now, they are offering fixed rates, as before the privatization, Mondays to Thursdays.

To give you some background: All the local airlines, including the partly state-owned Turkish Airlines, actively use differential pricing. But other than that, such arrangements are rare in the country. And since we can’t apply the same principle from air to sea travel, we are a long way off from using such a scheme in parking fees, as the U.S. is contemplating.

This blog is not Econ101, so I won’t do a differential pricing analysis, complete with consumer’s and producer’s surplus. But as a personal anecdote, before the privatization, I always had to buy my car ferry ticket to Bandirma at least a month in advance during the summer. So basically, those who prefer the old policy are favoring those willing (or able) to plan ahead over those willing (and able) to pay more.

More interestingly, all this debate has brought to surface my frustrations with the Turkish media once more: First of all, this new pricing scheme has been around for several months, but the media picked up the story only when journalists started using the ferries for their summer vacations. So much for investigative journalism:) I am equally disappointed that I have not seen a single article and column objectively discussing the advantages and disadvantages of differential pricing, making use of economic theory… I’d do it myself, but I only write once a week for the Hurriyet Daily News, and I have columns on Lady Watanabe, measuring investor sentiment, latest Turkish econ. figures and Balance of Payments already in the pipeline…

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