Posted by: sean | July 16, 2007

Supply and demand in Beirut

I heard once that Lebanon’s economy, and especially the banking sector, strangely did not follow any of the given wisdom about macroeconomics and conflict during the 15-year civil war. I don’t really have anything to back this up with except for a conversation that I don’t even fully recall. (If anyone does have any information on this, I’d love to read it.)

That being said, it wouldn’t surprise me if it were true, because I see economic verities being brashly thwarted all the time here. My latest example is with cab drivers. Normally, a cab ride should cost me a dollar from pretty much anywhere in Beirut to anywhere. (Foreigners typically have a harder time getting the normal rate, but that’s true all the time, and in most places that don’t have metered cabs. As a matter of fact, it’s also true in some cities that do, like the time I got ripped off in Istanbul coming from the airport because the cabby charged me the night rate.)

Lately, though, it’s been hard to find a cab between East and West Beirut for the normal price. Cab drivers keep asking for two dollars (servicein, for fellow Beiruis). The other night, I did the usual haggling dance with a cabby for a ride from Gemayzeh/Mar Mkhail to Hamra. I said one dollar; he insisted on two. When I asked him why, he told me it was because there wasn’t anyone around, so he needed to charge more because there were fewer fares lately.

I stopped and thought about this for a second: if there were fewer customers (lower demand) and presumably just as many cabs (equal supply), wouldn’t that mean a decrease in the usual fare? Wasn’t his logic flying in the face of the basic principles of supply and demand?

Well, yes and no. On paper, I should definitely be paying less than a dollar for that ride. But in the end, I suppose he was right, because I was tired of arguing about it and gave him his two dollars. 


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