Ryanair joins the confusopoly

I've noted before how transparent pricing is the bane of commodity suppliers - if buyers can make easy, accurate comparisons between identical goods and services they will try to buy the cheapest and suppliers' margins will be driven towards zero.

Recent research (pdf, via Tim Harford) has indicated that buyers are not actually very good at selecting the cheapest commodity provider, and in markets where entry by new competitors is problematic transparent prices can in any case actively discourage price competition. Hence, perhaps, the proliferation of online services that help buyers overcome their difficulty in finding the best price.

Suppliers try to avoid price transparency in various ways, but the most obvious is a bundling strategy, in which the headline price that buyers can compare with competitors' prices fails to reveal any number of hidden costs. Scott Adams calls this a confusopoly - "a group of companies with similar products who intentionally confuse customers instead of competing on price".

Ryanair has started charging passengers extra not merely for taking a bag onto the plane, but now also levies a charge for not taking a bag onto the plane (Thisismoney). This in addition to the over-priced, unnecessary insurance it habitually bundles with flights and a variety of other charges for paying for a ticket by almost any method at all. There can be little better evidence that price comparison works to find buyers the best price than the suppliers in that market concocting ever more complicated confusopolies to escape its effects.

(Disclosure: my employer, AND, owns comparison website Simplyswitch and the Thisismoney website cited in one of the links above.)