Granular pricing

Vietnam is ostensibly a communist country adopting a socialist market economy. I submit that - at least on the street level - it is neo-capitalist in my sense of the term. I know others have defined neo-capitalism for their own usage (see here and here); my definition of neo-capitalism is a market system that implements granular pricing.

Granular pricing is the ability to charge different consumers different prices for the same item. Here in the western world we have businessess and industries that exploit granular pricing. Ebay is a great example; so too is the auto industry, with price differentials for the same make and model across different dealerships. The consumer street scene in Vietnam and other less developed countries takes granular pricing to a whole next level - the ability to charge the same consumer different prices for the same item.

When I read bloggers and posters lamenting about being "ripped off" in their latest transaction I think, 'aha,' that's just neo-capitalism. As we all learned in Econ 101, for each product there is a supply-demand matrix. Vendors should assess this (macro-level) matrix in pricing their product. But what if the vendor has access to the supply-demand matrix on the micro-, individual level? With such information, wouldn't the transaction proceed more rationally and efficiently? After all, under the utilitarian view that undergirds the supply-demand curves, shouldn't a bottle of water be worth more to a thirsty person than a sufficiently sated one?

The street vendor (and you) suss out each other's curves through the act of bargaining. It's not an ideal method, but it works. So one day you may pay X for an item, the next X+ and the following X-. It doesn't mean that on some days you got taken and on others you did the taking; rather, the parties had different supply-demand matrices on the respective days and the item was priced accordingly. After all, in a fairly bargained transaction, neither party is ever "ripped off" - each should have extracted the maximal value from the other.

The only time that you are ripped off is when the cab driver drops you off across the street, just so that you cross an extra "zone" and therefore have to pay more. Oh wait, that's a D.C. phenomena.

So stop talking about being ripped off - if you don't like the price, then don't pay it and don't buy it. If someone tries to guilt or coerce you into paying for services not rendered, then stand up for yourself and don't pay them. If you paid more than you thought you should have, then that just means you're hungrier than you thought you were. And then marvel at getting a lesson in economics on the street.