The Ethics of Price Discrimination

by on February 20, 2017 at 7:28 am in Economics, The Arts | Permalink

Here is an example of price discrimination from the National Museum of India in Delhi, India. Motivating question for discussion. Is this fair or ethical? Would it be legal in the United States?

IndianPriceDiscrim

1 Joe Mckay February 20, 2017 at 7:32 am

Usually the price for locals would be written in the local language. So that non-native speakers wouldn’t realise price discrimination is going on.

This sort of thing doesn’t bother me in a poor country trying to make money from tourism. But in a rich country it wouldn’t feel right. I am not clever enough to figure out why.

2 Eddie February 20, 2017 at 9:40 am

Self-loathing

3 GoneWithTheWind February 20, 2017 at 10:41 am

Most state colleges and community colleges have four different tuition rates. State residents, out of state residents, foreign students and the free loading class who generally pay nothing. I am a hunter. If I hunt in my own state it costs me $30 a year. If you hunt in my state it could cost you $300. I am also over 65. I get into our national parks for free. I pay about 10% less for a meal in many restaurants. I pay half price for bus fare. I can attend my locl community college classes for free (I am now able to be a free loader). When I worked I was on salary and I averaged about 60 hours a week and I would often work with people making about the same annual wage who were hourly and when we worked overtime they would be paid $1000 more a month for the same overtime for which I got no compensation.

4 JWatts February 20, 2017 at 11:59 am

The senior discounts for meals are more of a permanent sale price to lure in traditionally cheap seniors. That being said, that was to a certain extent an artifact of the Great Depression, and I would expect many popular restaurants to start dropping the discount.

5 GoneWithTheWind February 20, 2017 at 5:38 pm

When I first qualified for senior discounts I ignored them. I really thought much like you that it was a token for the senior customers and the rest of us paid for it. But there are two very different things going on that have convinced me that isn’t true. First most restaurants have a senior menu, usually on the back page. It typically has less total food. The breakfast might have one egg instead of two or two pancakes instead of three. So in fact the cost/profit ratio to the restaurant for a senior is no different than any customer in these cases. Most restaurants will offer a senior menu item to anyone. You can be 20 and buy from the senior menu. They have managed to remove any possible “loss” from what may have once been a loss leader item.

A restaurant owner told me that his biggest problem is getting customers in the door and not the menu price/profit. He has told me that a $10 menu item costs him about $3 gross including overhead and labor when the restaurant is working at capacity and $7 profit.
But when the restaurant is at less than half capacity the cost doubles and even triples and he barely nets a profit. He said that weekends basically support the entire rest of the weeks operations. The price of the food is the least of his worries but his overhead and labor will kill him if he can’t keep people walking in to dine. He caters to the seniors and bases the entire dinner menu around what seniors and older people want and his only advertising is the sign outside that he uses to tout the evening meal special and by the way mention the senior discount. Sunday brunch is his next biggest money maker with Friday and Saturday dinner being first.

6 Harun February 20, 2017 at 1:59 pm

Now imagine a world where not all foreigners are rich westerners.

Why should a Malaysian student pay the foreigner amount?

7 Bill February 20, 2017 at 3:40 pm

In a market economy you don’t care that some foreigners can’t afford it. If you can maximise profit at a higher price while having to serve less customers then that is a win-win.

In New Zealand (where I live) there is debate regarding separate prices for tourists because as the market aims for the highest paying tourist locals can no longer afford it. Another controversial area is increasing attempts to lock out “freedom campers” who are tourists who come here and camp or use camper vans rather than staying in hotels. Basically, the argument is that we can’t take an infinite number of tourists so focusing on the more wealthy ones makes sense but it is strange because backpacking and freedom camping is in our blood as a culture.

8 foobarista February 20, 2017 at 6:16 pm

A Malaysian student who makes it to Delhi is probably richer than most of the Indian patrons.

9 JC February 21, 2017 at 1:54 am

I was in Cuba in 2004 and most museums did not charge anything for nationals.

10 Brian February 20, 2017 at 5:03 pm

I toured a volcanic lake in Guatemala. The toll taker on the trail had a booth with an official sign, not written in the local language but in Spanish so everyone could read it.

Foreigners paid Q15. Guatemalans paid Q7. And locals from the country paid Q1. I assume locals from the town paid nothing.

Seems fair to me. After all, I’m not a citizen and my income taxes aren’t supporting the local nature parks.

11 Brian February 20, 2017 at 5:07 pm

country->county

In my state the ski resorts offer steep discounts for local citizens if they buy before the snow starts falling. You can get a season pass for a very cheap amortized per-day rate if you’re a local that skis regularly.

And that policy is the same on ski areas on public land and private land. They just like having the locals be part of the experience.

12 Art Deco February 20, 2017 at 7:33 am

Since American anti-discrimination law is a malignancy, it shouldn’t be used as a gold standard to assess anyone else’s laws.

What’s ‘unethical’ about it? It’s perfectly up front and no one’s being scammed. India treats its citizens differently than it treats foreigners. Welcome to the world of the non-autistic.

13 art deco is closeted February 20, 2017 at 2:39 pm

right, of course. It’s just awful that we can’t round up all the homos and put them in the re-education camps where they belong.

14 msgkings February 20, 2017 at 2:48 pm

I’d settle for a pooftar, but they don’t even want me as customers in their salons.

15 ManuelNoriega February 20, 2017 at 4:58 pm

I think a venerable institutional voice like Art Deco deserves to be respected. But maybe he should get his respect in the comment section of a blog like this where he can openly express his theology:
https://orthosphere.wordpress.com/

16 j r February 20, 2017 at 7:05 pm

“Welcome to the world of the non-autistic.”

I always find it amusing that the people who want to obsessively organize everyone into ethnic, national and racial categories and who demand that everyone be treated primarily according to that category are fond of deploying the term autistic to try to describe those of us who are happy to eschew most of those characterizations and simply deal with people as individuals, on a case-by-case basics.

17 Evan Osborne February 20, 2017 at 7:35 am

Why wouldn’t it be? Foreigners on average are willing to pay more, which means (1) the museum has more money for improvements, and (2) Indian children whose guardians might not be able to pay much if anything can be charged a price of zero, making it accessible to them.

18 zbicyclist February 20, 2017 at 4:29 pm

This sort of price discrimination is common. In Tanzania, the price for Ngorongoro crater is $50 US for non-residents but 1500 shillings (about 75 cents) for residents.

But (1) in order to get there, I spent lots of money on flights. If I couldn’t clearly afford $50, what was I doing in Tanzania? (2) wildlife conservation costs money, and the political way to pay for it is with foreign tourism, (3) if the price was higher for locals, they’d be priced out of their own country. GDP per capita in Tanzania is $960.

19 Jeff February 20, 2017 at 7:40 am

Price discrmination like this is entirely legal in the US, for US citizens.

For example, at many (if not all) public universities tuition is substantially higher for state residents than for non-residents. For my Arlington County soccer team, nonresidents are subject to a surcharge. That sort of thing.

The rationale is of course that the local polity is providing a subsidy for the benefit of locals. I don’t see why a similar rationale would not apply to the National Museum of India.

20 Jeff February 20, 2017 at 7:42 am

>substantially higher for state residents than for non-residents

I meant the other way around, of course.

21 prior_test2 February 20, 2017 at 7:55 am

‘For example, at many (if not all) public universities tuition’

Shh – just because Prof. Tabarrok teaches at a public university with different tuition costs for in and out of state residents, it doesn’t mean he has to be aware of that fact.

Credit Hours

In State Tuition – 1 credit hour – $462.50

Out of State Tuition – 1 credit hour – $1,349.25

http://studentaccounts.gmu.edu/wp-content/uploads/Spring2017Undergraduate.pdf

22 Cliff February 20, 2017 at 11:21 am

Residency is not the same thing as citizenship

23 prior_test2 February 20, 2017 at 11:59 am

Of course not – most of the people residing in Fairfax and Arlington and Prince William Counties are American citizens.

Nonetheless, price discrimination based on where you live has been something I certainly grew up with in terms of Burke Lake. And as people have pointed out, this practice of distinguishing between two groups, and charging different prices, is as American as the senior’s discount for American citizens visiting a national park.

24 dan1111 February 20, 2017 at 7:41 am

Some U.S. museums and attractions offer discounted admission or deals for local residents (of the city or state).

I don’t see how this could be legal, and yet pricing based on whether you are a U.S. resident illegal.

25 steveslr February 20, 2017 at 7:48 am

Regional price discrimination is common in the U.S.: Southern California theme parks offer discounts on admission to Southern Californians. Torrey Pines South municipal golf course charges nonresidents $246 to play vs. $126 for San Diego Residents.

A sizable form of price discrimination against foreigners in the U.S. is that non-citizens aren’t eligible for college “financial aid:” (e.g., discounts off list price tuition). If you want a list of price breaks for American citizens, just have Google translate a Chinese birth tourism ad into English.

26 steveslr February 20, 2017 at 8:09 am

Sorry, my mistake, it’s $292 for non-residents to play Torrey Pines South.

27 Vivian Darkbloom February 20, 2017 at 8:18 am

Many of those U.S. museums and attractions are either run by state or local governments or they are subsidised by them. Thus, it is typically those who are getting the discounts who are footing the subsidy bill. Not unreasonably, they might expect to get something for their tax dollars. In constitutional parlance, this is a “reasonable basis” (if not a “compelling reason”) for this “discrimination”.

28 dan1111 February 20, 2017 at 8:30 am

Some private businesses (e.g. Disney World) also offer resident discounts, though. This rationale wouldn’t apply for them.

29 Vivian Darkbloom February 20, 2017 at 8:35 am

I said “many”, not “all”. Even so, the fact that you are a private business doesn’t mean that you don’t benefit from local tax subsidies. And, the locals need to pay the price of the on-going nuisance.

30 Richard Gadsden February 20, 2017 at 9:48 am

The business argument for that is that residents are likely to come back, so pricing should be designed to charge them for as much as possible and if that means less per visit to get them to come ten times a year then sobeit. Non-residents will come once a year or once a lifetime, so you want to extract as much as possible.

31 dan1111 February 20, 2017 at 10:20 am

Yeah. Plus if you are paying hundreds or thousands of dollars on plane tickets to Orlando, you are less sensitive to the entry price.

32 Mike February 20, 2017 at 1:59 pm

To add a bit more detail, but otherwise broadly agree:

For Orlando area residents, it also encourages them to bring family and friends who visit. I have children and they like Mickey, but spending $500ish at the margin to visit the Magic Kingdom would be…impractical. It also makes it feasible to do day trips just because it seems like a nice weekend to do so, again without the huge marginal cost or the concern about getting there super early or staying super late to get our money’s worth on a particular day. As long as we do okay on average, we keep renewing.

33 TMC February 20, 2017 at 11:11 am

This also is repayment for the externalities of all the traffic, ect. that the locals must endure because of Disney.

34 dan1111 February 20, 2017 at 11:18 am

Orlando would be a real backwater if not for Mickey Mouse. I think the local residents overwhelmingly benefit from Disney World’s presence.

35 Roy LC February 20, 2017 at 9:37 am

The US Park Service currently has a $10 senior pass that is only open to US citizens, lawful permanent residents, and in the fine print US nationals of Samoan origin. This is exactly the same thing.

36 dan1111 February 20, 2017 at 9:49 am

+1 for finding an exact equivalent.

37 daksya February 20, 2017 at 7:44 am

The price for Indians, if set to market rates, would price out many domestic visitors i.e. the working class / poor. It would also prove a minor and symbolic obstacle to cohesion due to the lack of access to own history.

And if they didn’t price the foreign tourist rates high, the government would have to subsidize the upkeep of these sites.

38 prior_test2 February 20, 2017 at 7:48 am

Of course it would be legal – you are familiar with the entry fees for Burke Lake Park in Fairfax, right?

‘Entrance Fees

There is no charge for Fairfax County residents.

Charge for non-county residents on weekends and holidays only (no charge on weekdays), April through late October:

Vehicle Type Fee

Car $10.00

Motorcycle $5.00

Large Capacity Van $10.00

Bus $40.00

Picnic groups and birthday parties (on weekends and holidays): Individuals attending picnics and birthday parties who are non-county residents are also subject to pay the $10 non-county resident fee. Those having parties at Burke Lake Park may pay the gate fee for their non-county resident guests by downloading the Gate Pre-Payment Form and following directions at the top of the form.’ http://www.fairfaxcounty.gov/parks/burkelakepark/

Of course the reason for this ‘price discrimination’ is that Fairfax County taxpayers are the ones that support the park. Though not a member of the GMU econ dept. and thus not finding this somehow unusual in the least, one can reasonably assume that at least part of the thinking behind this ‘price discrimination’ is the same.

And to be honest – Burke Lake is not really worth a 10 dollar admission fee.

39 Al February 20, 2017 at 8:43 am

Come on, it’s got frisbee golf!

40 Dzhaughn February 20, 2017 at 12:19 pm

Because residents of Fairfax county would not be able to afford parking at the market rate, where as the wealthy tourists who have traveled from neighboring counties can afford much more.

41 steveslr February 20, 2017 at 7:51 am

The federal government could pick up many billions in easy revenue by taxing many immigration and travel related services it currently provided for nominal, if any, fees.

42 steveslr February 20, 2017 at 7:55 am

There’s an easy $10 to $20 billion in annual fees and taxes that could be collected from foreigners to fund a saner immigration system. It’s pretty much cash lying on the sidewalk that American politicians don’t pick up because it would make the Statue of Liberty cry. Or something.

43 prior_test2 February 20, 2017 at 8:05 am

Yeah, because a 160 dollar fee per tourist isn’t high enough – https://travel.state.gov/content/visas/en/fees/fees-visa-services.html

Though those lucky enough to be covered by the Visa Waiver Program only have to be approved by ESTA – and to pay for it, of course, with the low, low fee of 14 dollars.

44 A Black Man February 20, 2017 at 9:28 am

You appear to be confused by the words “immigration” and “tourism.” This might help:

Tourist: https://www.merriam-webster.com/dictionary/tourist

Immigrant: https://www.merriam-webster.com/dictionary/immigrant

Hope that helps.

45 prior_test2 February 20, 2017 at 9:46 am

And you seem unaware that all foreigners coming to the U.S., for any reason, need a visa first, making this statement – ‘It’s pretty much cash lying on the sidewalk that American politicians don’t pick up because it would make the Statue of Liberty cry.’ pretty much nonsensical.

You might want to read that link in detail, which covers all visa fees, not merely tourist ones – https://travel.state.gov/content/visas/en/fees/fees-visa-services.html#permanent

‘Coming to the United States Permanently – Immigrant Services

Immigrant visa application processing fees are tiered, as shown below, based on the visa category you apply for.

Notice: Every visa applicant must pay the visa application processing fee for the visa category being applied for.’

Hope that helps.

46 jim jones February 20, 2017 at 10:03 am

As a Brit I will only be charged $4 if I am refused entry

47 prior_test2 February 20, 2017 at 10:26 am

Interesting, since I thought ESTA’s fee did not rely on admittance, being a screen to see whether or not one can be admitted when covered by the Visa Waiver Program.

But it turns out you pay only $4 dollars for the U.S. to refuse you admittance when screened by ESTA – https://help.cbp.gov/app/answers/detail/a_id/1143/kw/esta%20refund/session/L3RpbWUvMTQ4NzYwNDEyMC9zaWQvYVM0RGFKYm4=

Of course, as noted, ESTA does not guarantee admittance to the U.S., and you pay the full $14 even if you are denied entry to the U.S. subsequently.

48 Vivian Darkbloom February 20, 2017 at 8:33 am

Sorry, but pt2 actually has a point. The tricky issues here are 1) who bears the cost of these additional fees and taxes; and, 2) what is the deadweight cost of them?

I was recently shocked to learn that in order to visit Russia, an American citizen must pay a $160 fee for a visa and likely an additional $30 in agent fees—just to get in! But, as pt2 hints, these fees tend to be reciprocal; a gain to the US Treasury is typically a cost to US citizen travellers. And, those fees tend to reduce discretionary travel. The entry fee is but a small portion of the potential “take” to an economy flowing from foreign visitors. This is, however, apart from the obvious need for a “saner immigration system”. I think there are more effective means of reducing illegal *immigration* (e.g., more effective control over employers and a more robust deportation policy) than putting up fees that reduce discretionary *visitation*.

The US could easily collect many billions more on withholding taxes on the outward flow of US dividends and interest, but that would almost certainly result in higher taxes on US investment abroad. US tax treaties are reciprocal, and even unofficially arrangements, tend to be reciprocal.

49 Ricardo February 20, 2017 at 8:49 am

What about the visa or immigration process is currently free? The immigrants I speak to all have stories of endless stacks of paperwork, application and filing fees and attorney’s fees. Tourist visa fees are sometimes bilateral in nature.

50 A Black Man February 20, 2017 at 9:33 am

Those are fees paid to third parties, not the government. There is a multi-billion dollar industry built around gaming US immigration laws. Sailer is suggesting the government take that over in the same way states took over alcohol and gambling.

51 Ricardo February 20, 2017 at 10:45 am

The fee schedule for all visas is here: https://travel.state.gov/content/visas/en/fees/fees-visa-services.html

If the government were to raise the prices of certain visas but simplify the paperwork, that would almost certainly be a win-win. But there are few free visas listed and I wouldn’t exactly describe the charges as “nominal.”

52 wiki February 20, 2017 at 9:37 am

Which is all the more reason to impose much higher costs on illegal immigrants and to expel them whenever possible. As a legal immigrant who followed the rules strictly, waited for years and spent thousands of dollars to get my green card, I am always offended when the MSM conflates legal and illegal immigrants.

I always say: Let the US adopt Canada’s immigration policy — which favors education, work skills, and English speaking ability over family connections. It is much tougher than anything that Trump has formally proposed, yet SJW’s don’t seem to be up in arms over it.

53 prior_test2 February 20, 2017 at 9:53 am

‘It is much tougher than anything that Trump has formally proposed’

That just might be because Trump is the son of an immigrant mother that would not pass your proposed standard. It is also possible, though subject to reasonable debate, that two of Trump’s three wives would not pass through such a system either. Maybe Trump is a man with a big heart for those who come to America to live the American Dream, based on his own life.

https://en.wikipedia.org/wiki/Mary_Anne_MacLeod_Trump

54 TMC February 20, 2017 at 11:18 am

Back then, she’s need someone to vouch for her and assume financial responsibility for her (her sister).

I’d guess none of Trumps wives would have any problem proving to be financially responsible.

55 prior_test2 February 20, 2017 at 11:53 am

‘Back then, she’s need someone to vouch for her and assume financial responsibility for her (her sister).’

Probably not, that being a more modern invention, though by 1930, immigration law had shifted a fair bit, including how visas were issued prior to immigration.

That vouching for and supporting also applies to American citizens born overseas and having one non-American parent. Strangely, this only applies until that American citizen turns 18, at which point the American parent that signed the consulate paperwork is no longer responsible to ensure that an American citizen will not be a burden to the American government.

‘I’d guess none of Trumps wives would have any problem proving to be financially responsible.’

This could be considered insulting in implying that the current First Lady is a gold digger, but likely, it is just poorly formulated.

56 Thiago Ribeiro February 20, 2017 at 10:48 am

Why should I pay for a saner i migrarion/customs system? I don’t want one. In a free mrker, I should only be made ro lay for things I use. Otherwise, it is robbing Thiago to pay Taylor.

57 Cliff February 20, 2017 at 11:27 am

If you don’t want to pay for a visa, don’t get one

58 Thiago Ribeiro February 20, 2017 at 11:41 am

I want to pay for a visa (or at least I am willing to), I don’t want to pay for this saner immigration system nonsense. I am not trying to immigrate and I am not trying to keep immigrants out. I pay tourists’ fees, not immigrant fees. Add tjose to the wall costs and make the Mexicans pay for it, too.

59 Alan February 20, 2017 at 7:56 am

Look no further than higher Ed in USA for worse. Provide them with all your finances and they will magically “determine” how much it will cost (how much you pay). Sweet racket to have infinitely fine price discrimination.

60 Anon2 February 20, 2017 at 8:01 am

Hide your assets in a Roth retirement account. Complete school, then withdrawal contributions tax free.

61 Anon February 20, 2017 at 7:57 am

Title VII of the Civil Rights Act of 1964 makes it illegal to discriminate on the basis of national origin. This law applies to employers with 15 or more employees. It forbids discrimination based upon an individual’s birthplace, ancestry, culture, linguistic characteristics (common to a specific group) or accent.

62 dan1111 February 20, 2017 at 8:05 am

However, national origin is not the same as current country of residency.

63 Roy LC February 20, 2017 at 9:44 am

This is clearly very confusing to a great many people. If we discriminated against UK citizens of Sudanese origin it just might be illegal.

Or another way to think about it is if you were to have a policy of discriminating against people of German extraction, whether they are citizens of Wisconsin, Venezeula, Germany, or China (I actually know one) that would be verboten.

64 Alex Usjer February 20, 2017 at 8:02 am

1) Many countries do this in higher education: a market rate for foreigners, a subsidized rate for local residents. In the US, it;s done on a state-level (one for in-state, one for out-of-state) as well as for international students.

2) I believe similar rules are in effect in most of Africa with respect to National Parks. Certainly they are in TZ, which I know best. $100 a day or more to be in Ngorongoro Park for foreigners, I think it;s somewhere between 2 and 5 dollars for locals.

65 Axa February 20, 2017 at 8:04 am

Someone already mentioned the out of state tuition in US universities.

Passport check in airports is very similar. When you get home there are 10-20 lanes for locals, passport check takes 5 min or less. Foreigners have less lanes and have to do a 30-90 minutes queue for passport check. In the US, there’s the Global Entry service, you a fee to have a service at the level offered at locals.

This should be a non-event for a seasoned expat: it’s normal to pay more for the same when you compare to locals. My funny anecdote: when I request the same tax deductions all the locals do, I’m regarded as a greedy non-integrated foreigner. Fair, ethical? Or just absolutely normal.

66 Cliff February 20, 2017 at 11:29 am

Passport check for U.S. citizens frequently takes 1 hr or more

67 prior_test2 February 20, 2017 at 11:54 am

Not in my experience.

68 Careless February 21, 2017 at 10:12 am

the rare agreeing with PA moment

69 Luis Pedro Coelho February 20, 2017 at 8:09 am

In the EU, it would be illegal as phrased, but if it said “Indian residents” it would be not only legal, but common.

70 prior_test2 February 20, 2017 at 8:11 am

With the added fact that in EU supported museums, not only would students resident in that country likely get free admission, all students in all EU member states would get free admission.

71 dan1111 February 20, 2017 at 8:36 am

It could also say “EU Nationals” and “non-EU Nationals”.

72 shrikanthk February 20, 2017 at 8:17 am

By the way they have no way of identifying who is a foreigner and who is Indian, except by gauging your accent and skin color 🙂

So if you are a Sri Lankan, Bangladeshi, Pakistani, Iranian or Middle Easterner (with a brownish typically Indian complexion), you can pass for an “Indian citizen” as long as your English accent is “Indian” enough.

73 Dan Hill February 20, 2017 at 10:34 am

Or advertise the lower price in the local language. I had that experience at a historical site in Lebanon. The lower price was labelled in Arabic and literally said “if you can read this” (according to my Lebanese father-in-law who haggled for ten minutes to get me in at the locals price, saving maybe five bucks).

74 Tor February 20, 2017 at 8:18 am

I hope it is actually by residency not nationality. I don’t mind them charging more for tourists than for locals. If they require an immigrant from Bangladesh or Sri Lanka to pay the higher price, I would call that bad discrimination.

75 shrikanthk February 20, 2017 at 8:21 am

Did you check out the Harappan Dancing Girl at National Museum? (circa 2500BCE) That’s the museum’s most prized possession.

76 Swapnil February 20, 2017 at 8:29 am

Great Higher education examples above.
Also, Disney does same for state (Florida): https://disneyworld.disney.go.com/florida-residents/

77 Ricardo February 20, 2017 at 8:32 am

It is fair to the extent that the upkeep of the place is financed out of taxes paid by locals. This is a common phenomenon throughout Asia. That said, they should probably allow foreigners with proper working or residence visas to pay the local price. And, as Shrikanth points out, people who look vaguely South Asian and can maybe say a few words in Hindi will unfairly get the “Indian” price regardless of actual nationality.

78 Bunker Brown February 20, 2017 at 3:55 pm

Museum staff have several tricks to sniff out non-Indian brown people. They usually ask the family’s kids an innocuous question in Hindi. Kid freezes, red sign. They look at the clothes. The shoes. They used to look for electronics, but now the locals have the same kit.

79 rayward February 20, 2017 at 8:35 am

This is an example of people discrimination not “price discrimination”. The latter is a more technical term, used to describe the practice by a seller of charging different prices to different customers based on the superior knowledge of the seller. Amazon engages in price discrimination. As do automobile dealers.

80 dan1111 February 20, 2017 at 8:53 am

Wrong.

81 Melmoth February 20, 2017 at 8:35 am

Common practice in China too.

82 TerriW February 20, 2017 at 8:36 am

For all the reasons mentioned above, this doesn’t bother/surprise me. But when I was in Malaysia ~30 years ago, I was surprised by the billboards that listed BP and non-BP prices — where BP stood for “Bumiputra,” sons of the soil (ethnic Malay). So, they weren’t sticking it to the tourists, but to the ethnic Chinese who were actually local residents, as well.

83 Kay February 20, 2017 at 8:58 am

This applies any where in the world. Medical fee, college education is always different for local and international students. Further, in India, there is discrimination within Indians also based on caste, income levels and age- certain sectors give concessions for senior citizens or individuals that belong to “backward” listed castes or if family income is < a defined level.

84 polyglot February 20, 2017 at 8:59 am

This is racialist, rather than rational price discrimination, because a US citizen of Subcontinental origin, no matter how rich, can easily evade the higher tariff whereas similar people of purely Nordic or Sub Saharan African origin would be penalised. Interestingly, I understand that Chinese or other Far Eastern tour parties are provided with the distinctive Nepalese cap and sail through.
African Muslim students in Delhi long ago realised that by saying they were ‘Siddis’ they could get free admission, if they chose, because the ‘Siddis’ are reputed to be Islamic scholars with a special power over the Djinns.

This is a clearly racialist and senseless type of price discrimination because, for example, Sub Saharan Architecture or Design Students with a genuine interest in visiting, might be made to pay more whereas wealthy Sub Continental origin US citizens pay the subsidised rate.

85 Nahim February 20, 2017 at 9:42 am

Yes there will be some foreigners who pass off as Indians: that does not make this “clearly racialist.” It is very likely that those foreigners who do so would not be willing to pay 650 rupees for admission anyway. In the meantime the scheme used by the museum is easy to implement: all it requires is for the guy at the gate to make a quick assessment “Indian” or “foreigner”.

Of course if the museum wanted to implement this strictly they could ask for passport/ID card verification at the gate. If they do not, it is because they know they do not want to turn away potential visitors who can’t be bothered with bringing their ID for a simple visit to the museum.

86 dan1111 February 20, 2017 at 9:46 am

I don’t think you should call it a “racialist” policy simply because the ability to commit minor fraud and avoid the higher price is related to one’s race/ethnicity.

The higher fee is less than $10 USD; how many wealthy tourists are really trying to pass themselves off as Indian to avoid that?

87 OldCurmudgeon February 20, 2017 at 11:01 am

>The higher fee is less than $10 USD;

It’s $10 for per cultural site and this practice is ubiquitous. So, budget an extra $30-$40 per travel day. That’s a significant sum for some travelers.

One unfortunate side effect of this policy is that you’ll continue to get solicited by local entrepreneurs while in the cultural site.

88 Anon February 20, 2017 at 11:55 am

Actually if as a US citizen of Subcontinental origin you try to pay the Indian rate , very often they guess the truth by way of accent, clothing etc and demand the “foreign” rate, You would be asked for an Indian ID. I have seen this happen often.

89 H982 FKL February 20, 2017 at 12:41 pm

@ polyglot

You seem to be assuming that the goal of “rational” price discrimination should be to maximize revenue by charging more to people who are richer.

I would guess that the goal of this is very different – to encourage Indian nationals to visit. Museums like this are often used as a tool for fostering a sense of national identity and shared history (look at the name “National Museum of India”), which is important to have for a number of reasons. Call that “racialist” if you like, but it’s not “senseless” at all.

90 RPLong February 20, 2017 at 9:31 am

I lived in a US tourist town for a little while. Like any tourist trap, prices were pretty high for so much scammy junk. Eventually I discovered that you could ask for a “local discount,” which in most cases was pretty substantial. This was an informal arrangement and nobody advertised the discount in print, so in that case it was different. Same function, though. I imagine this sort of thing is quite common.

91 dan1111 February 20, 2017 at 9:48 am

Was there some way of checking if you were a local? Did they know you?

92 RPLong February 20, 2017 at 10:10 am

Outside the tourist population, it was a small town. If people got suspicious, a driver’s license (with local address) usually did the trick, especially at gas stations, where there were already plenty of excuses to ask for ID.

93 Daniel Lurker February 20, 2017 at 9:34 am

Found it interesting that a performance by the Bogotá Philharmonic offers discounts both to those who are relatively poor and to those who are rich (and vain) enough to join a club that gives you an “Intellect Card”.

• Programa de Formación de Públicos – Secretaría de Cultura Ciudadana: Entrada libre a los habitantes del municipio de Medellín de los estratos 1, 2 y 3 presentando su última cuenta de servicios públicos en la Taquilla del Teatro Metropolitano de lunes a viernes en horario de 10:00a.m. a 6:00p.m.
• 20% Tarjeta Intelecto El Colombiano

(First bullet point says that if you live in a a neighborhood that is in stratum 1, 2, or 3 and bring your last utility bill [which shows this number] you can enter for free. Colombia formalizes status by neighborhoods, from 1 to 6. In addition to giving discounts or free admission to the relatively poor, schools like The Columbus School will ask for a copy of your utility bill.)

94 Bill February 20, 2017 at 9:45 am

No problem with the price discrimination under US law. You paid your taxes, directly or indirectly. Notice that the distinction applied to Foreigners (non-citizens)

Here is an example for price discounts at the National Parks Service based on US citizenship. https://www.nps.gov/planyourvisit/passes.htm

By the way, this post illustrates two things: 1) Alex is not a lawyer and doesn’t understand the law and 2) We should stop giving faculty or academic discounts.

By the way, don’t try nationality to private institutions; hotels, bakeries, etc. unless the state gave a subsidy for the discount.

95 Bill February 20, 2017 at 9:56 am

Also, public accommodations under Civil Rights acts also go in here.

Also, there may an economic issue here as well: ordinarily, price discrimination is designed to segment customers between high willingness to pay and low willingness to pay segments. And, the audience of consumers accepts it: hey, students get a discount because they are, or should be, poor; etc. The discount is not perceived as “unfair”. Fairness is a norm. If seller were to segment based on some distinction that would be perceived as “unfair” the seller would more sales from both segments. Fairness and social norms play a big role in marketing.

96 Bill February 20, 2017 at 11:35 am

Sentence corrected: Seller would lose more sales from both segments.

97 cliff arroyo February 20, 2017 at 9:56 am

This is only weird because it’s in English, if they had the Indian price in a bunch of Indian languages and the foreign price alone in English then who would know?

Years ago in Prague I saw a similar sign with the price for the Jewish museum written in words (five hundred crowns) in Czech which was much lower than the English version. Enough people apparently complained that they wrote the same prices in both languages (but with a note in Czech only about asking for discounts).

Lower prices for locals is hardly anything weird.

98 Bunker Brown February 20, 2017 at 3:57 pm

For some Indians (Goa, Christians in Maharashtra), English is their official language. So you would technically be discriminating against Indians if you did not post prices in English.

99 Wilbur February 20, 2017 at 10:01 am

Price discrimination aside, INR 650 is about USD 10. I would happily pay that to subsidize a local.

Also price discrimination between nationals/non-nationals happens everywhere. College tuition in North America is one. In many countries in Europe, non-nationals pay the same (low) tuition as nationals. In Canada, medical care is free to nationals, and charged at market rates to non-nationals.

The common argument is that local taxation helped support public institutions, therefore taxpayers should get a break. Non-taxpayers who are a consuming a public good they didn’t help support should pay the market rate. I think this is perfectly ethical.

The contention is when the rates are above market rates. For instance, almost all US/Canadian *public* colleges (private colleges ironically treat everyone the same) treat international students as cash cows and charge the ABOVE MARKET RATES, and charge domestic students BELOW MARKET RATES, and use the former to subsidize the latter. I think it’s still fair if international students are willing to pay. In that situation, you are defining two different markets: one domestic, and one international.

100 Agammamon February 20, 2017 at 10:21 am

It would not be legal in the US – national origin is one of *seventeen* ‘protected classes’.

But it should be. Let them discriminate, let the market sort it out.

http://www.oddee.com/_media/imgs/articles/a226_p2.jpg

101 Bill February 20, 2017 at 11:39 am

Disagree. See comment above.

102 Bill February 20, 2017 at 11:44 am

By the way, we are not talking about discrimination in employment, etc. We are talking about price discrimination based on citizenship in an entry fee for a national museum in the post.

103 Sam Haysom February 20, 2017 at 1:35 pm

Why should employment be any differnt same principle stands- Americans have contribute infinitely more to Ford than Indians.

104 Jay February 20, 2017 at 1:56 pm

Why it SHOULD be different and what the law says and is applied to are different arguments.

105 Albigensian February 20, 2017 at 10:46 am

The City of Chicago offers reduced admission to residents who are taxed to support some government run attractions, although the discount (except for free days) is nowhere near as large as this.

So, there appear to be two issues here: price discrimination based on citizenship or local residence, and price breaks given to those whose taxes support the institution.

Can U.S. nightclubs still admit women with reduced or no cover charge (as they may if they think it will attract more paying male customers)? If so, would it still be legal if the discount were only offered to women judged as attractive by the club’s staff?

BTW, when I was in India I was with Indians who vouched for me (even though I am obviously of European descent), and obtained admission at the reduced rate; no one asked for ID. Was that illegal or immoral (especially when one considers that at least a low level of corruption seems to be the norm in Indian commerce and government)?

106 Bill February 20, 2017 at 11:36 am

The males are implicitly willing to pay more because the discrimination attracts women. The only way males would object to offering women discounts would be if it was a male gay bar.

107 Sam Haysom February 20, 2017 at 1:35 pm

It was both.

108 Art Deco February 20, 2017 at 4:56 pm

BTW, when I was in India I was with Indians who vouched for me (even though I am obviously of European descent), and obtained admission at the reduced rate; no one asked for ID.

Well then…

https://www.youtube.com/watch?v=VopC0g5UViM

109 ex-PFC Wintergreen February 22, 2017 at 1:02 pm

Entry to the Art Institute of Chicago is $20 for Chicago residents, $22 for Illinois residents, and $25 for everyone else. I believe that this is because they receive some funding from city taxes.

110 Black Death February 20, 2017 at 11:29 am

This sort of thing is common in India (and elsewhere in the Third World). The Taj Mahal charges Indian nationals Rs. 40 (around US$0.60) for admission versus Rs. 1000 (around US$15) for most foreign visitors. This sort of admission pricing is common in India. If you can afford the cost of getting there from the USA or Europe, the price difference seems inconsequential. Plus, if you’re a foreigner, you go right in, while the line for Indian nationals seemed to stretch on forever when I was there a few years ago. Totally worth it.

111 dearieme February 20, 2017 at 11:51 am

“Is this fair or ethical?” That’s a daft question to ask a bunch of economists.

112 john February 20, 2017 at 12:01 pm

used to way different pricing. $20 foreigner and 20 rupee local. I was in india when they introduced the two-tier pricing 20 years ago or so.

best part was at every attraction, you would have locals making fun of you non-stop over having to pay 45x more to get in. I would tell locals they let me in for free or I got away with local price and they would be pissed off.

113 Ryan February 20, 2017 at 12:14 pm

The problem for me is that this sort of price discrimination sorts itself out on the basis of race. That is, the prices are posted with the assumption that foreigners can afford more than locals. This assumption does not always hold up: some foreigners might be resident in the country and make local wages (and pay local taxes) as I did when I worked in Thailand and China. In other cases, people with a foreign parent who grew up locally but look a little different are often charged the foreigner price no matter what their passport says.

114 Dzhaughn February 20, 2017 at 12:23 pm

Museum price discrimination for locals in Seattle is laundered through the Seattle Public Library.

http://www.spl.org/library-collection/museum-pass

115 Dzhaughn February 20, 2017 at 12:28 pm

tl;dr: one free visit per week to any of a dozen museums; same museum once a month. Includes the best of the lot, like flight museum, SAM, MOHAI, aquarium.

116 Nic February 20, 2017 at 12:28 pm

I remember 2 years ago – Jama Masjid in Delhi. Some mean Indian dude charging wife and I 60 rupees upon entering even though dozens of Indians just walked on through. He wore no badge, like all of India, no easy way to discern who is in charge or has authority to collect.

I balked on paying for a bit to the point where he almost got aggressive. There wasn’t even a sign or anything like the one posted here.

Oh well, like much of India, when you convert these types of ‘tourist tax’ fees to dollars while out and about, you realize it’s +/- a buck….on principle though grrr!

117 mike February 20, 2017 at 12:49 pm

Indiana state park entry fees are $7 / car with Indiana license plate and $9 / car with license from other state. Price discrimination here doesn’t bother me in the least.

118 Devin Lavelle February 20, 2017 at 1:23 pm

There’s tons of price discrimination in the US. In most cases, though it’s based on a local/state resident, rather than foreign nationals.

It makes a lot of sense in a number of ways. Most directly, these are usually taxpayer supported sites (even Disneyland). In many cases there are public goods to be derived from residents having the opportunity to learn about and celebrate their local history, culture, etc.

119 Jill Napro February 20, 2017 at 1:42 pm

Same deal at the Taj Mahal – the foreigner price is 20x the Indian national price. I thought this was pretty unfair when I encountered it, but it does make sense. In theory, Indian residents pay taxes to support the upkeep of the museum (and the Taj Mahal), so in a way they’ve already paid for their entrance fee through taxes. They shouldn’t be double charged. I think the US should adopt the same pricing policy for National Parks, heritage sites, etc. that are funded by taxpayers. Put more of the burden on foreigners so the domestic residents aren’t double charged.

120 Turkey Vulture February 20, 2017 at 2:13 pm

Could always change the framing: 97% discount for anyone with a [whatever documents would be used to prove Indian nationality]!

121 Harun February 20, 2017 at 2:28 pm

I know many Taiwanese who get angry when places in China charge them the “foreigner” price.

China supposedly thinks Taiwan is part of China, and must be united…except when it comes to charging fees.

LOL.

122 chrisare February 20, 2017 at 2:59 pm

This predominates in the developed world with goods and services that attract both locals and tourists with vastly different average purchasing power. E.g. domestic air travel in Nepal and National Park fees in Tanzania.

I don’t think fair is the right way to frame the question. And no it wouldn’t be legal in the USA because there’s not that huge gap in average purchasing power between locals and foreigners.

123 J.M. Varty February 20, 2017 at 3:34 pm

Very common at public attractions in Thailand, especially those run by the government; one price for Thais, a much higher price for foreigners.

124 Viking February 20, 2017 at 3:38 pm

You guys are skirting the really interesting aspect:

Should those paying full fare (and if numerous enough, keep the place in business) get a more deluxe uncrowded experience, for example by getting 2 hours in the morning without locals?

Would this be a true win-win, allowing a better quality experience for everyone, like the symbiotic relationship between first class and cattle class on airplanes?

125 Adam February 20, 2017 at 3:49 pm

I believe in the UK national pay but can claim a tax credit when they visit National Trust sites. Given that their tax money supports it, this never bothered me in the least.

126 Blades February 20, 2017 at 4:14 pm

This happens all the time to travelers, especially with regard to leisure activities ( which would seem to include visiting a museum)

Many public golf courses in the United States do this, especially municipal courses.

In Ireland, many courses favor locals, or they give a preference to golfers who belong to an Irish golfing Association, which you can only join if you regularly play at an Irish club.

This has never struck me as unfair ( I have felt envious). It has always seemed to me to be a very reasonable form of price discrimination.

127 Feyi February 20, 2017 at 4:44 pm

I remember queueing to enter the casino in Singapore some years ago. The line for foreigners moved very quickly while that of Singaporeans moved slowly

Reason being that foreigners were allowed to enter the casino for free while Singaporeans had to pay $50 or something …to discourage them from getting addicted to gambling!

But foreigners? Knock yourselves out

128 Curious Kid February 20, 2017 at 5:02 pm

If I am a private business owner and I can make more money by charging everyone at the market rate, why should I concern myself with the fact that locals might get priced out of affording my services? Why should I self-regulate my business into lower profits?
The reverse of this is also true; why should I charge the market rate to locals if I anticipate that I will earn more business through repeated customers at a lower price?

Either way, my decision is driven by whether or not I will profit. Why should it be any different?

129 Troll me February 20, 2017 at 6:05 pm

They want to make money from it, but it would be troublesome if most Indians could not afford to attend.

The foreigner premium is 50% higher at the Taj Mahal. 20 ruppees for Indians and 1000 for foreigners. The view’s pretty could from some nearby hotels or restaurants, where can enjoy tea and food with a view for a biut more than the Indian entry price.

In asking the “is it fair” question, I think focus on the ability of ALL Indians to be able to afford entry to such places if it’s really important to them, while also engaging in revenue optimization for foreign visitors.

It would not be legal in the US, or most Western countries for that matter. Instead we have things like “free on Wednesday after 6pm” to ensure that the best monuments and exhibits are generally available to all, although not all the time.

130 Russ February 20, 2017 at 6:37 pm

They do this in Honduras all the time

131 Chris Lawrence February 20, 2017 at 7:23 pm

Example I ran across recently: you can get a free guided tour of the UK Parliament if you’re a UK resident (if arranged via your MP). If you’re not one, you’ll be paying £25.50 (about USD $32) for the privilege.

132 stephan February 20, 2017 at 9:13 pm

It would be legal in the US. Here are the protected classes. It’s not forbidden under the protected classes legislation. The citizenship category refers to citizenship status (US/National/Green card holder etc..)

https://en.wikipedia.org/wiki/Protected_class

133 TheNewHumianBieng February 20, 2017 at 9:54 pm

When my wife and I were Kilimanjaro

134 TheNewHumianBieng February 20, 2017 at 10:03 pm

When my wife and I were climbing Kilimanjaro we decided afterwards we would go to Nairobi. We had arranged tourist visas ahead of time but still had to pass through immigration. At the Tanzanian Kenyan border while we were waiting in line a moment happened that I will never forget. The man checking passports loudly shouted: “Any Irish to the front of the line!” My wife, a dual Irish US citizen, had told me of the value of an Irish passport (which is why she always brings both when we travel abroad. And after fifteen years of marriage my she had no compunction about leaving me behind. So she passed into Kenya a full two hours before me.

135 jorod February 20, 2017 at 10:33 pm

This is the ethics of socialism.

136 David Keohane February 21, 2017 at 12:01 am

Hey, I live in Mumbai and can access the local prices at museums etc if I produce my PAN card — in other words, if I can prove I pay income tax.

I sometimes feel a bit guilty doing this but that’s perhaps an argument for another time… and another link about the low level of income tax payers in the country.

If you want to see a real diff in price between local and tourist levels, then have a wander to Sri Lanka. Often only USD is accepted. That said, imo, they tend to look after their historic sites a touch better than they do in India.

D

137 Joe_Stokes-Bradely February 21, 2017 at 3:16 am

Does it matter whether it is interpreted as a surcharge on foreigners (outsiders) as opposed to a discount for locals? Which is how I conceptualize it. I don’t care what local people pay. I consider what its worth to me. It isn’t an attack on my self-concept (as though I’m being discriminated against in a negative personal way.

BTW, does this mean foreigner professors (etc.) should refuse to be paid more than local professors (etc.) are paid?

138 Faria February 21, 2017 at 4:42 am

Unfair and unethical would be to price out most Indians of their National Museum (which, I imagine, they subside though taxes) due to much richer international tourists, or to charge the same low price for international tourists who in a few days probably spend, in airline travel and accommodation, more than an average Indian’s annual income.

139 misc February 21, 2017 at 5:24 am

In many European museums entry is free for EU citizens, but others have to pay. Nothing wrong with that.

140 Andreas Moser February 21, 2017 at 7:42 am

If you visit as a foreign-Indian couple, you pay a fair price on average.

141 jsmith February 21, 2017 at 9:47 am

Seems to me a better question is whether it is fair or ethical to allow illegal immigrants in-state tuition rates when citizens who are residents of other states pay full freight.

142 Liz February 21, 2017 at 9:49 am

I used to live and work in India on an Indian salary. However, because I was white, I was forced to pay the foreigner’s fee. Sometimes I could pay the local fee once I showed my Pan card (Indian tax card). This was especially frustrating to me because my Indian American friends (who looked Indian, but were on vacation as tourists) never paid the foreigner’s fee. So in practice, it is price discrimination against non-Indian looking people — it has nothing to do with being a citizen or not. That being said, I could obviously afford the foreigner fee, and I recognize the necessity of making it cheaper for locals who truly can’t afford it. It is not wrong in principal, it should just be enforced better.

143 Jay February 21, 2017 at 1:34 pm

Why is this a post? Obviously its to “tax” tourists who are taking advantages of museums built by tax dollars. What’s the big deal? They don’t have the infinite budget that the Smithsonian does and requires money for upkeep.

144 Keisha March 9, 2017 at 4:44 am

· What a fantastic st7v1-we&#82yo;re all had our moments in the kitchen! I made a brussel sprout dish very similar a couple weeks ago. Rave reviews! I’ll have to give your version a try.

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