Leaving Las Vegas (if they can)

In 2005 I presented figures on U-Haul pricing (via Andy Roth) between Los Angeles and Las Vegas. At that time it was much more expensive to rent a truck to go from Los Angeles to Las Vegas than from Las Vegas to Los Angeles. 

One-Way Trip (August 2005) Price
Los Angeles to Las Vegas $454.00
Las Vegas to Los Angeles $119.00

Since the distance is the same the difference is price was likely due to the fact that more people wanted to escape LA than leave Las Vegas. The key idea is to recognize that as an ideal U-Haul wants the number of trucks at each one of its locations to be the same every day. Thus, U-Haul must choose prices on all of its links so that at the end of the day the same number of trucks come into Los Angeles as leave.  One way of doing this is reducing the price on Las Vegas to Los Angeles trips.

Ok, so what are prices today?

One-Way Trip (October 2010) Price
Los Angeles to Las Vegas $223.00
Las Vegas to Los Angeles $234.00

Prices have halved on the LA to Las Vegas trip and doubled on Las Vegas to LA. Yup, the Las Vegas boom is over.  

As I said in my earlier post, U-Haul pricing is an interesting way of talking about "demand and supply, the difficulties of identifying price discrimination, and why it's efficient to have "women enter free" nights at clubs."  I leave the latter as an exercise.

Here is Tyler on Not Leaving Las Vegas.


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