Two-tier pricing is something that I have been thinking about lately. For those of you who haven’t experienced it firsthand, it essentially means that locals and ex-pats/tourists are charged different prices for the same items and services (with the ex-pat inevitably paying more). In my (limited) experience, it isn’t uncommon in the developing world. At times, it is subtle: the price you pay on an item in the market largely depends on your bargaining skills. Someone else may get a better price, but it is unlikely that you will immediately notice this. At other times, it is blatant, such as when tourist attractions charge tourists far more than locals, or tourists are given restaurant menus with higher prices for the same items.
I have heard friends here complain that two-tier pricing “isn’t fair.” I used to agree with them. When I first started travelling as a teenager, it enraged me that I had to pay more than the locals, particularly as I didn’t see myself as wealthy. Recently, though, I’ve started to wonder if it’s my definition of “fair” that is problematic. How fair is it that wealthy (largely) Western tourists and ex-pats descend on a developing country and, in spite of their considerably greater purchasing power, expect to pay the same price as locals? I suppose it is fair if you base your definition of fairness on the cash value of a good. If, however, you base fairness on what each customer can afford, you get a very different definition. Todd likes to remind me that people will be charged what they are willing to pay – or, in more technical terms, what the market will bear.
Two-tier pricing can get complicated, particularly in a country like Thailand, where there are a variety of different socio-economic levels, both among ex-pats and locals. There is a massive gap between the purchasing power of a rural Thai labourer, and a Thai businessman in Bangkok’s financial district. At the same time, there is an equally large gap between the socio-economic status of a Western teacher working in a local (Thai) school, and an ex-pat engineer receiving a “hardship” allowance. It probably isn’t fair that locals are categorized one way, and foreigners another, when there are so many different economic levels in each group.
I guess what I am getting at is that there is no perfect system, and certainly no fool-proof way of calculating “fair” prices. The two-tier system is perhaps as fair as any other system. Perhaps this really comes down to the debate between socialism and capitalism. The side of the political fence that you fall on likely influences your definition of fair.
Thoughts? Am I way off base?