Tuesday, December 2, 2008

Cost Analysis

Getting around Hyderabad typically involves rickshaws. Technically, they're supposed to use their meters. But, they often trick tourists into settling on rates upfront. I was fortunate enough to have my first rickshaw driver actually use the meter, giving me a baseline to compare other fares. I'm still probably overpaying, but at least not exorbitantly so.

On Sunday, Brian and I were trying to get a taxi back from Old City after lunch. Based on earlier rides, we figured it should cost about 250 Rs to get home. After bargaining one taxi driver down to 300, we hopped in his rickshaw ready to go. As we did this, a few police officers who had been standing at the corner approached the vehicle. They told the driver to turn the meter on. Despite some initial resistance, the driver agreed. We thanked them and drove off.

After turning the corner, the driver pulls the rickshaw over, wheels around, and turns the meter off. I reached up and tried to stop him, but he started shouting at me in another language. I can't imagine he actually thought that I could understand what he was saying. After a few seconds of him yelling and us looking confused, he took off and we were on our way home.

When we arrived at our hotel, I asked the guy at the front desk how much it should have cost for our ride. He said we were lucky to get 300 Rs. Some co-workers told me on Monday I shouldn't have paid more than 150. In Seattle, I'm sure the cab ride would cost at least the equivalent of 1,500 Rs.

2 comments:

Ken said...

I find this an interesting notion, that the taxi driver is "overcharging," and that the police are trying to enforce this law. In previous blogs, it was mentioned that there is this great economic disparity between what happens in the technological zone and what life is like in the neighborhoods in between. I'm sure that the high tech zone operates on the notion of "what the market bears," yet the laws governing the poor people involve regulation on trade. I find myself puzzled trying to figure out exactly why the rickshaw driver should not be able to command the higher fare, if that is what people are willing to pay him for his service.

Auy said...

That's a very interesting point, Homework Trap.

Your comments indicate that taxi services should be part of a capitalist market. But, capitalist markets work under the assumption -- or at least work best -- when there is perfect knowledge. I doubt very much that the police enforce the use of meters for locals using auto-rickshaws. Locals have better knowledge as to what fares should cost and are thus in a better position to negotiate a "fair" price.

Tourists, on the other hand, tend to have very poor knowledge as to what the market forces are. So, the enforcement here is an attempt to counter that lack of knowledge and provide some level of protection.

It's not uncommon for governments to protect players in a market. For example, the American government imposes a minimum wage. If we were to be purely capitalist about it, companies should be allowed to pay their workers whatever they're willing to work for. But, the government doesn't because it imposes some non-economic concept of "fairness."

That being said, these might have just been some particularly empathic policemen who felt bad for us. This anecdote does not necessarily indicate a government policy.