Truth About “Tourist Inflation”

I’m getting confused by the assertions. On one hand, hromero says,

For me this is less about what the taxis are charging but about the practices many of them employ to overcharge people they perceive to be tourists and underserve the locals.

Yet jbmass says,

Never mind the taxi drivers sit around all day to get one ride for the day.

I would think that if there are locals to be served at the authorized fare rates, taxistas would find it preferable to take a dozen or more fares from locals than, “sit around all day to get one ride for the day”.

I also have some difficulty understanding the economics of the taxi industry here.

The last time I took a taxi from Zihuatanejo to Troncones was three or four years ago. I just didn’t want to stand in the micro all the way to Troncones that day. I negotiated the fare down from M$800 to M$600. Remember, that was three or four years ago.

A couple of days ago I had a truckload of furniture delivered from Zihuatanejo to Troncones. The delivery people were separate from the furniture people, so there was no “free delivery” or “reduced fee for delivery”. The cost for loading the truck, driving to Troncones, unloading the truck, and returning to Zihuatanejo was M$1,000. The truck had nothing in it but my goods, so the case that company was receiving two payments for the delivery.

There seems to be a discrepancy there. A taxi costs more than a more-capital intensive and labor-intensive delivery? Maybe next time I’ll ask the delivery company to take me to Troncones!

I think ZihuaRob is correct. If the supply of taxis, Teslas, oranges, milk, or anything else increases beyond what purchasers consume, it will be difficult to make a profit selling them. You might be able to increase demand for Teslas, oranges, or milk, but you are not likely to increase the demand for taxis in an over-saturated market.

This is effectively a zero sum game. The solution is not to increase prices, keeping the drivers with marginal incomes and reducing the assets of local people. It is to reduce the number of taxi licenses so that the taxistas who are sharing the limited revenue available can have greater income.

When there are five taxis waiting at Soriana and another five waiting across the street to (eventually) replace them, it is apparent that the market is over saturated.