Let’s put aside the simple explanations, such as "Nobody goes there." Let’s also put aside artificially contrived scarcities, such as for Super Bowl tickets or hot restaurants on Saturday night. We are left with the following:
1. Some stores put impulse purchases next to where you wait in line. If the line is too quick you won’t spend any more money. Borders uses this strategy very effectively, it is harder for Home Depot.
2. The authority of final decision-making is to some extent indivisible, plus managers can only be hired in integer numbers. Yet some stores require more managerial attention to resolve disputes than others. I never bicker over price in the supermarket, but ever try to get a late fee waived in a video store?
3. Some stores may use growing and shrinking lines as a substitute for changing prices. The waiting time in line at my Giant is often longest late at night. In essence they are charging you a higher price to shop late at night. The company "wins back" some of this tax by skimping on labor costs. Perhaps this system of "flex prices" is easier than altering the bar codes or price stickers on an hourly basis.
4. Long lines may serve the cause of price discrimination. Perhaps the store offers personalized shopper services, free home delivery, or other services at a premium. These ancillary benefits might be more profitable if shopping takes just a bit of time. Low-income demanders won’t mind so much, high-income demanders may be pushed to the extra services.
5. Rentals take more time to process than do cash transactions. Some of the incidence of this burden falls on consumers. If rentals take twice as long to process, and consumers arrive at random rates, the profit-maximizing solution is not generally to double the number of service clerks. This would lead to an excess of idle labor during the day.
6. Many consumers are a pain. But they are less likely to complain or slow down the process when the line behind them is long. So attempts to shorten the line are to some extent counteracted by the increasingly difficult behavior of your fellow man. This lowers the store’s return to line-shortening. The store prefers to capture some of these rents by cutting back on service, rather than allowing their more difficult consumers to push everyone around.
7. Perceptual biases and selection – It feels like you are waiting in line most of the time because you are. When you are not waiting, the experience ends quite rapidly.
Explanation number two is taken from Caroline Mayer’s "A Perpetual State of Pause," The Washington Post, December 5, not yet on-line.