Charging extra for certain preferences, such as choosing a seat on a flight, can lower the base price, increasing access to no-frills options for low-income customers, while also allowing companies to increase the You will be able to customize the service to suit your preferences. For example, airlines can separate in-flight meals and checked baggage, leading to increased revenue opportunities and lower base fares. Indeed, “price discrimination,” charging different customers different amounts for the same product, can be harmful to online customers. But when consumers place vastly different values on particular services, prohibiting such unbundling puts prices on poorer consumers and makes them more expensive than other consumers want or need. You may be forced to pay for services that are not available.
Similarly, overdraft fees from banks can help discourage costly behavior. Banks incur costs and risk when customers overdraw their accounts. Overdraft fees help deter this behavior in a targeted way by imposing a fee on customers whose accounts are overdrafted. Capping or limiting overdraft fees does not eliminate these costs or risks. It just means someone else has to charge the fee differently. Therefore, banning overdraft fees will mean higher fees for some other bank customers.
This is from “Abolishing ‘Junk’ Fees would Be Junk Policy” by Ryan A. Bourne, by Ryan Bourne. The War on Prices: How Common Misconceptions About Inflation, Value, and Prices Create Bad Policy, released this week. In fact, there is other content between these two paragraphs.
As I said in the introduction to this book, this is one of my favorite chapters.Specifically, I I have written“Particularly good are the chapters on rent control, oil and gas price regulation, and so-called junk fees. These are actually fees that solve problems that would exist without them. .”
Bourne cited President Biden’s attack on “junk fees.” Given Joe Biden’s low or next to no understanding of economics, one gets the impression that he thinks that eliminating junk fees will not raise prices.
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