We parked our car at the Austin airport for six days, and my brother then picked it up to use during his three-day visit to my mother. He left it in airport parkinglot when he flew off three days later, a few hours before we returned.
This exchange was a clear Pareto improvement: he avoided the cost of renting a car, but he saved me three days of charges for parking ($30). I can’t think of anyone who was made worse off by this exchange, and both of us were made better off. My mother commented how altruistic I was to let him use the car; but, as is so often the case, my motive might just as well have been pure selfishness.
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JG,
Since neither the parking garage nor the rental company had prior knowledge of this arrangement, they had no expectation of revenue nor did they incur any expense as a result. It’s not as if the garage collected the three days worth of revenue and then lost it or had to refund it as you imply. Similarily, the rental agency had no idea that Daniel’s brother might have rented a car those days had he not been able to borrow one. The garage and rental company were not made worse off as you claim, they simply were not made any better off.
How many miles did your brother put on the car? Did he refill the gas tank afterwards? If he drove 30 miles in it, sure, you probably weren’t harmed. If he drove 3,000 miles, the cost of the oil change that you are now due for is the $30 right there, not to mention the wear on the tires, transmission, suspension, etc.
J.Ja
I can imagine people from a simpler time or place on a tour of the airport… “So over here [gesture towards rent-a-car center] people pay to use cars and over there [gesture towards parking lot] people pay to leave cars?!?”
How did you hand off the keys?
The same kind of “selfishness” that Ayn Rand wrote down more than 50 years ago, in her book “Atlas Shrugged”. You both got benefit with a free exchange, without hurting anybody else.
@ Pete,
I have to disagree with you on this one. There was one choice; (i) no car exchange (ii) a car exchange. With option (i), the rental company makes profit. Compare this with option (ii).
It’s all about comparing the situations in which there was a choice. It has nothing to do with transparency. You have to assume the Daniel and his brother did not change their schedule based on that choice.
Pete: that’s a bit of an odd argument. By this logic, once Daniel and his brother had planned this arrangement, they no longer expected to pay anything to the parking or rental companies, and therefore they were no better off by making the deal.
It all depends, of course, on which counterfactual you pick. But the fact that the parking and rental firms didn’t know about the counterfactual doesn’t mean they wouldn’t have been better off had it happened.
@Paul (#8),
The relevant innovation from Europe isn’t mass transit, but car sharing. If Daniel Hammermesh had access to a fleet of shared cars, he could reduce his daily vehicle use, avoid car-storage fees, and the various transaction costs (wear and tear, gas, insurance, key transfer) that come with lending out your personal car.
Part of the problem of car ownership is that once you own a car, it is the cheapest form of transport — very low marginal cost. Car sharing eliminates the capital cost but raises marginal cost, reducing car use in exchange for other forms of transport when appropriate.