Tuesday, July 14, 2009

Cost of one plate of Char Kway Teow

Somebody suggested that we can consider reintroducing non-air-con buses. Unthinkable? Not so. The only problem is, our public transport system does not always let the market decide. Peanuts can tip the balance. Let me illustrate.

Just yesterday, at some old coffeeshop at Hougang, I decided to have an unhealthy char kway teow for lunch. The last time I ate at the stall, the char kway teow was priced at $2 and $3. Obviously, the $3 plate had a larger serving of noodles and cockles. And to make myself feel less guilty about eating such an unhealthy dish, I would always order the $2 plate. The $3 serving was almost 2 times larger. Apparently, the $3 plate was not very popular.

A surprise awaited me at the stall when I went there yesterday. There was no more $2 char kway teow. Instead, it was either $2.50 or $3. Yep, I fell for the trap. $2 is now $2.50. $3 is still $3. Which one would I order? $3 of course. The hawker may not have really increased the price of his $3 char kway teow. However, by increasing the price of his $2 char kway teow by 50 cents, thus closing the gap between “regular” and “large” to only 50 cents, he has definitely increased the demand for the $3 “large” plate. How ingenious.

Now we go back to the topic of non-air-con buses. Will there be any takers? I’m sure there will be. Some old folks, some foreign workers, backpackers etc. But what about the fare? How much less than the air-con buses? Half the price? Wait a minute. The public buses in Singapore don’t have windows that can open. They can’t just use the vehicles whose air-cons are not working to run the non-air-con services. They’ll have to buy new buses or import old buses from neighbouring countries. Either way, it means spending money which in turn means that the fares can’t be too low. Being unprofitable is a death sentence in Singapore, even though some companies that are far from unprofitable continue to squeeze their customers who have little or no choice. If there is little difference between fares charged for air-con and non-air-con buses, which type will our wise consumers go for?

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