1.6. Driving along America's interstates, you'll notice that few rest areas have commercial businesses. Vending machines are...

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1.6. Driving along America's interstates, you'll notice that few rest areas have commercial businesses.

Vending machines are the only reliable source of food or drink, much to the annoyance of the weary traveler looking for a hot meal. Thank the National Association ofTruck Stop Operators (NATSO), who consistently lobby the U.S. government to deny commercialization. They argue:

Interchange businesses cannot compete with commercialized rest areas, which are conveniently located on the highway right of-way ... Rest area commercialization results in an unfair competitive environment for privately-operated interchange businesses and will ultimately destroy a successful economic business model that has proven beneficial for both consumers and businesses.9 The sorrow of a land without burgers.

a. How does NA TSO make travel more expensive for consumers?

b. Do you think most Americans have heard ofNATSO and the legislation to commercialize rest stops? How does your answer illustrate ra tional ignorance? Do you think that the owners of interchange businesses (i.e., restaurants, gas stations, and other businesses located near but not on highways) have heard ofNATSO?

c. Why does NATSO often succeed in its lobbying efforts despite your answer to part a?

Hint: What is the concentrated benefit in this story? What is the diffused cost?

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Modern Principles Microeconomics

ISBN: 9781429239998

2nd Edition

Authors: Tyler Cowen, Alex Tabarrok

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