Rail Fares

Yesterday saw the announcement that rail fares are going up by 6.2% in January, which has naturally caused plenty of consternation, with Guardian blogs fuming about the social exclusion going on.  The same sentiment is declared on Liberal Conspiracy too, with another sentiment being expressed: Controlling train fares protects the consumer.

However, is that true? Is it really true that controlling prices protects customers? In Contemporary Issues we'll spend quite a bit of time looking at reasons why governments might intervene in various markets to do things like control prices.

If you think you agree with the sentiment that controlling prices protects customers, hopefully you'll be challenged about the bases on which you hold that view, while if you think it is much more complicated, the course will help you to articulate that sentiment better.

A view that controlling prices protects customers ignores the possibility that customers are affected by the quality of a good being produced, and also its quantity. The upward sloping supply curve we are all used to now tells us that if the price is held low, then the quantity supplied will be low - it's not worth firms providing.

The supply curve is just one analytical tool we'll make use of in the course, but hopefully your appetite has been whetted already...