How Car Rentals Explain the 2021 Economy
https://www.nytimes.com/2021/09/20/upshot/car-rental-prices-economy.html
Quoctrung Bui and Neil Irwin note:
The story of rental car prices, while unique in its way, is a vivid example of dynamics that apply across many other goods. The shortages of 2021 were in large part caused by a combination of supply decisions made more than a year ago that can’t be undone, and demand conditions that returned to normal with speed that few expected.
Markets are quite effective at doing their job of finding equilibrium. When prices get as high as they did for car rentals in June, it destroys demand. People will figure out another plan. But just because prices moderate doesn’t mean they have to go back to their prepandemic level, and some of the change that has happened may turn out to be surprisingly long-lasting.
https://www.nytimes.com/2021/09/20/upshot/car-rental-prices-economy.html
Quoctrung Bui and Neil Irwin note:
The story of rental car prices, while unique in its way, is a vivid example of dynamics that apply across many other goods. The shortages of 2021 were in large part caused by a combination of supply decisions made more than a year ago that can’t be undone, and demand conditions that returned to normal with speed that few expected.
Markets are quite effective at doing their job of finding equilibrium. When prices get as high as they did for car rentals in June, it destroys demand. People will figure out another plan. But just because prices moderate doesn’t mean they have to go back to their prepandemic level, and some of the change that has happened may turn out to be surprisingly long-lasting.