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Rental Car Pricing

Many local rental car agencies rent late model cars at substantially lower prices than national companies such as Hertz or Avis. Despite their higher prices, the national companies still retain most of the market. Explain why most renters patronize the national car rental companies despite their higher prices. How have the national companies encouraged this price insensitivity?

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The customer pays the national car rental agency a price differential for convenience and virtually-assured quality. While you can rent a car from a local company, you can return the car only at the local company's lot. However, you can return the car at any lot of a national car company. (this is especially convenient for those taking "road trips" over ...

Solution Summary

This solution discusses ways in which national rental car companies retain customers despite the fact that most local car rental companies charge less.