Truth About “Tourist Inflation”

by Little Guy @, Monday, January 30, 2023, 08:21 (125 days ago) @ nicatnit

Incredible to complain about tourists generosity for services received as a reason for higher prices being charged by restaurants and taxis.

I think you mistake a report of something as a complaint. I am relating what a local resident told me about discussions they have had with restaurateurs.

When a restaurant increases prices it’s because of increased costs.

I suggest you are being naive, disingenuous, or falling into the fallacy of affirming the consequent.

Affirming the consequent, sometimes called converse error, fallacy of the converse, or confusion of necessity and sufficiency, is a formal fallacy of taking a true conditional statement (e.g., "If the lamp were broken, then the room would be dark" ), and invalidly inferring its converse ("The room is dark, so the lamp is broken" ), even though that statement may not be true. This arises when a consequent ("the room would be dark" ) has other possible antecedents (for example, "the lamp is in working order, but is switched off" or "there is no lamp in the room" ).

If input costs increase, it may result in increased prices, but input cost increase is only one contributor to why prices increase.

I suggest you go back and read Adam Smith. He described various reasons for price fluctuations. Here is one of my favorites.

“People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”

Prices will increase to what the market will bear, regardless of input costs. If people will pay higher prices, businesses will charge higher prices. Tesla raised and raised its prices because people would pay, not because their input costs increased. Instead it’s margins increased. But then Tesla’s inventories started to build. This month, Tesla cut car prices by up to 20%. This wasn’t because of decreased input costs.

In response,

Ford Motor Co. announced Monday that it's dropping the price of the 2023 Mustang Mach-E SUV from $600 to $5,900 depending on the model, just weeks after its primary competitor Tesla also cut the cost of its electric vehicles (EVs).

That is not because of decreasing input costs. Input costs are only one factor influencing prices.

Do you have even a clue about inflation or economics?

Yes. I spent 20 years negotiating multi-year contracts that considered economics, including inflation.

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