firmly in place has been confirmed through an abundance of historical evidence.
The Preposterous 'Ripping Off' in the High-demand Season
As we approach the end of August, the air is cooler in the early morning and night to clearly indicate the coming of autumn. However, in no more than two to three weeks ago, severe heat drove the nation to popular holiday spots to enjoy summer vacation. In the course of it, we often encountered the news about vacationer's complaints on the 'ripping off' in popular summer resorts.
For example, a TV news reported that a motor camping resort operated under direct management of Donghae city located in the eastern seashore of the peninsula profiteered by more than tripling the accommodation fees compared to those in the non-season period. The city built this motor camping resort three years ago in Mangsang Beach by investing in 9.6 billion won. It was very popular that the reservation for the entire 45 units until the end of August was filled by mid July. The city is charging 120,000 won for a camping car too small to accomodate even 4 people, which is three times the amount of 40,000 won charged during the non-season period. At this, the TV announcer delivered the news of the reaction of vacationers complaining about the profiteering activities of Donghae city.
Most people would be well aware that, in the market economy system as adopted in Korea, the price of products or service is determined in accordance with the demand and supply of market. Given that other conditions are the same, the greater demand, that is the larger number of people wanting to purchase any products or service, results in price increase, while the larger number of people wanting to sell results in price decrease. Here, the power to purchase is called demand pressure and the power to sell is called supply pressure. Therefore, when other conditions are the same, price increases with the increasing of demand pressure and price decreases with the increasing of supply pressure. These are the market rules.
Price increase due to reduction of supply(or increase in unit cost) is relatively well accepted by consumers. On the other hand, price increase due to rapid rise in demand is very difficult for consumers to digest. It is because consumers regard price increase due to rise in demand as unfair profiteering activities by sellers to take advantage of consumers' weaknesses. Thus businesses both private and public intending to increase price used to try to make an excuse that such increase in price is inevitable due to rise in the unit cost of products or services.
As of the rules of nature, the market rules are powerful and often merciless. The reason that the price in popular vacation spots increases during peak holiday seasons by more than three times than of the non-season times is because the pressure of demand on accommodation in the corresponding market of lodgings, condominiums and caping sites, etc. rapidly increases during the high-demand holiday seasons. It is not only because the business runners in popular vacation spots are immoral or pursuing excessive profit. (In winter time, the prices are often drastically reduced. This is not because the business runners suddenly became repentant or decided not to profiteer.)
Some time ago, an unfortunate incident happened where a farmer working in a rice field to open up waterways before expected rain fall was hit by thunder and killed. Of course, the farmer did not do a punishable act to be killed by thunder. According to the rules of nature, the positive and negative electricities were discharged in this open field and the farmer's body was unfortunately located in the highest position to be passed through by the electricities at that very moment. So the farmer ended up being hit by thunder and it was because of the rules of nature. When a farmer who hasn't done any punishable act was hit by thunder, he or she may resent the mother nature. Nevertheless, it by no means is a rational act to do so.
In accordance with the rules of nature, farmers standing in open field on a thundering day are highly likely to be hit by thunder. Likewise, consumers intending to spend their vacation in a popular holiday spot is highly likely to be 'ripped off' in accordance with the rules of market. Consumers may resent and reproach the high prices. Nonetheless, it is not a rational act to do so.
In order not to be hit by thunder, a farmer must not stand in an open field during the thundering hours. As such, in order not to be the target of 'ripping off', consumers are advised not to travel to the vacation spot where everyone else wants to spend their vacations in for the summer holiday season. Although the customers, believing that 'consumer are the king', might complain about the ill-treatment, they must also remember that they cannot be treated like king at all times. They can only be the king in a time and place (market) of low pressure of demand and in a time and place (market) of high pressure of supply.
For consumers to be treated like a king, they have to search for the time and location to receive such treatment. Fortunately, it is relatively easier to obtain such information these days by using the Internet. Consumers can easily decide on the time and location to spent their holidays in by finding out in which holiday spots the vacationers complained about the 'ripping off' of business runners in previous seasons. Nevertheless, those consumers who are still planning to spend their holidays in the most popular spots, are very likely that they will again be the victims of peak season high prices. They could again be resentful about it, but it by no means is a wise and rational action to be assumed.
Lastly, I would like to comment on the fact that many vacationers resented the high price of motor camping resort run by Donghae City during the peak holiday season. I ask them to think about whether they would still protest that the high price is unfair if the city were to raise the price for holiday season to accomodate foreign tourists trying to find an accommodation in the motor camping resort. (Of course, it does not mean it is proper to charge higher price to foreign tourists.) I ask them to think about whether they would applause their own local government authority if it were to establish a motor camping resort with the taxes paid by them and to charge the same price to tourists during the peak summer season as in the ordinary season(winter?). If operation loss occurs, would they be willing to supplement the losses by paying more tax?
Sohn Jung-shik (Professor, College of Economics and Finance, Hanyang University, Seoul, Korea)