OK, not the “law of one price” you learned in undergrad trade theory. I’m talking about plain old prices at the cashier.
It has long bugged me that the price listed on a sales tag is not the same as the money that comes out of our wallets to complete the transaction. Most of the time it is provincial and federal sales taxes that get tacked on, but air travel is particularly guilty of major extra fees, and the new charges announced by Air Canada will only add to that gap between what is initially advertised and the final price.
This appears to only be an issue in Canada. In other countries, you pay what the price tag says. And so it shoud be here, too. So my law of one price would compel businesses to advertise the final sales price, all costs in, taxes included. They can feel free to show the breakdown of sub-items on the price tag if so desired, but the tag should legally be required to show the final price.
- Glass-House Mortgages (March 21st, 2013)
- Baskin-Robbins and the Walmartization of Ice Cream (July 20th, 2012)
- The Privatization of Social Housing (November 5th, 2011)
- Stephen Gordon on Manufacturing (October 17th, 2010)
- A hip hop version of the Keynes vs Hayek debate (October 12th, 2010)