A working market depends on many things, including price transparency. If people don't know how much they are paying for a service of unknown quality, they can't compare products and services.
Hidden fees are one way to prevent price transparency, but they are not the only one.
It may seem strange, but a working free market needs strong guidance. Laissez-faire capitalism will lead to broken markets with loss of freedom. There are too many ways to impede market competition. Here is a list of some, without claiming to be complete:
- Monopolies and oligopolies
- Cartels and collusion
- Confusion marketing (confusopoly)
- Hidden fees
- External costs
Especially external costs are insidious. This means that a company does not pay for everything it uses. For example, if a company lets it rip and pollutes a river instead of having its wastewater processed, it transfers the cost of pollution to everyone else.
When I was younger, I believed that capitalism would solve everything because of the invisible hand, a concept introduced by Adam Smith. The invisible hand is the idea that even if everyone egoistically optimizes their own benefits, there will be a natural collaboration that will achieve progress.
Today I know that this can work with a lot of strong guidance. One example: California has banned hidden fees.
Capitalism is not the same as a working market.
A working market depends on many things, including price transparency. If people don't know how much they are paying for a service of unknown quality, they can't compare products and services.
Hidden fees are one way to prevent price transparency, but they are not the only one.
It may seem strange, but a working free market needs strong guidance. Laissez-faire capitalism will lead to broken markets with loss of freedom. There are too many ways to impede market competition. Here is a list of some, without claiming to be complete:
- Monopolies and oligopolies
- Cartels and collusion
- Confusion marketing (confusopoly)
- Hidden fees
- External costs
Especially external costs are insidious. This means that a company does not pay for everything it uses. For example, if a company lets it rip and pollutes a river instead of having its wastewater processed, it transfers the cost of pollution to everyone else.
When I was younger, I believed that capitalism would solve everything because of the invisible hand, a concept introduced by Adam Smith. The invisible hand is the idea that even if everyone egoistically optimizes their own benefits, there will be a natural collaboration that will achieve progress.
Today I know that this can work with a lot of strong guidance. One example: California has banned hidden fees.