Why Were Third-Class Train Carriages So Uncomfortable?

How firms sometimes deliberately make cheaper products worse to push customers toward premium options, from 19th-century railways to modern airline seats.

In the 1840s, some French railways ran third-class carriages with wooden benches and no roofs. Covering them would have cost little. Why leave passengers in the rain?

Dupuit’s answer

The French engineer-economist Jules Dupuit explained in 1849 that it was not about the cost of a roof. The railway wanted to stop passengers who could afford second class from buying third-class tickets. By making third class unpleasant, it pushed richer passengers to pay more, while still selling cheap tickets to poorer ones.

This is a form of price discrimination, where a firm charges different customers different prices, using product quality to separate them.

Damaged goods

Economists Raymond Deneckere and Preston McAfee described in 1996 how firms sometimes deliberately damage a product to create a cheaper version. Examples include:

A printer where the cheaper model has the same hardware but is programmed to print slower.
Software where the basic version has features switched off.
Chips sold at lower speeds with parts disabled.

It can be cheaper to make one product and disable features than to make two different products.

Modern examples

Airline economy seats: less legroom and fees for basic services push some passengers to upgrade.
Basic economy fares that exclude seat selection and luggage.
Freemium apps with ads or limits in the free version.
Streaming services with lower video quality in cheaper plans.

Is it bad?

It can seem wasteful to make products worse on purpose. But economists note it can let firms serve lower-income customers at low prices who might otherwise be priced out. If the firm could only sell one version at a high price, poorer customers might get nothing.

The unreserved compartment

A railway offers luxury, air-conditioned and basic classes. The large price differences reflect real cost differences, but also the need to separate customers by willingness to pay. Some features, like the comfort of seats, help ensure those who can afford more choose higher classes.

Thinking cheaper versions always cost less to make

Sometimes cheaper versions cost the same or even more to make, because features are deliberately disabled to separate customers.

Key takeaways

Dupuit explained in 1849 that uncomfortable third class pushed richer passengers to pay more.
Firms sometimes damage products to create cheaper versions, a form of price discrimination.
Modern examples include basic economy fares, freemium apps and streaming plans.
It can let firms serve poorer customers who would otherwise be priced out.