An example of free market?
The autorickshaws in Chennai do not charge based on the fare meter. Instead, one negotiates the fare while boarding. So, if one knows the region and how far is the destination, s/he can negotiate a fair price. If not, you get charged two times what the actual fare ought to be.
For example, the distance between IIT gate to Adyar signal is approximately 2 kilometers. The fare for this distance should be between Rs. 14 to Rs. 20. However, I have never seen any of my friends negotiate it for anything less than Rs. 20. At the same time, when I hail the auto, the drivers invariably ask for Rs. 30, and complain a lot even to bring down the fare to Rs. 25. Since I know that I should not be paying more than Rs. 20, I don’t take the auto unless the driver agrees to this price.
I guess if someone ends up paying Rs. 30 for that distance, you could consider the additional Rs. 10 as an “information tax”… an excess amount you need to pay because of insufficient information you have to negotiate a fair price. Likewise, hailing an auto in front of a five star hotel would cost Rs. 20 more than if you hail the same auto from half a block further. This excess charge is simply because an average customer exiting from the hotel has both the capacity to pay more and a disinclination towards haggling too much.
I prefer the Bombay system of paying by the meter, but cannot grudge too much if the auto driver in Chennai is able to wrest a few extra bucks from me.
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