Follow Up To: Full Service Gas stations in New Jersey do not have awnings to protect customers from the rain. Let us presume for the moment that due to some combination of inertia, regulations and initial costs, it is not practical for them to create such awnings in the short term. Now suppose that New Jersey legalizes self-service. 90% of the time it is not raining, and the customers gain $0.25 of net utility from the cheap gas that comes from self-service. However, 10% of the time it is raining or snowing or something else unpleasant, and in those cases customers would on average be $5 better off if someone pumped their gas for them so they didn’t have to get out of the car. Some even get to avoid ruining their $60 haircuts.
What If It Rains?
What If It Rains?
What If It Rains?
Follow Up To: Full Service Gas stations in New Jersey do not have awnings to protect customers from the rain. Let us presume for the moment that due to some combination of inertia, regulations and initial costs, it is not practical for them to create such awnings in the short term. Now suppose that New Jersey legalizes self-service. 90% of the time it is not raining, and the customers gain $0.25 of net utility from the cheap gas that comes from self-service. However, 10% of the time it is raining or snowing or something else unpleasant, and in those cases customers would on average be $5 better off if someone pumped their gas for them so they didn’t have to get out of the car. Some even get to avoid ruining their $60 haircuts.