U-Haul has to make sure they have trucks in stock at their retail outlets around the country to meet local demand. If people are moving from Point A to Point B in larger numbers then from Point B to Point A there is going to be an imbalance of trucks available. How does U-Haul resolve this? With pricing, of course.
Look at the following example Mark Perry uses to illustrate what is happening between California and Texas.
From Sacramento to Houston: $2,370
From Houston to Sacramento: $1,007
From San Francisco to San Antonio: $2,214
From San Antonio to San Francisco: $1,069
It is twice as expensive to move from California to Texas than vice versa---same truck, same distance. Lots of Californians want to move to Texas but not as many want to move from Texas to California.
This is a nice illustration of movement along the market demand curve for Rental Trucks. In order to decrease the quantity demanded for trucks in California they increase the price. In order to increase the quantity demanded for Rental Trucks in Texas they decrease the price. This helps keep the right number of trucks available in BOTH California and Texas.
For my new Illinois friends---here is the pricing to move from Illinois to Texas (Dallas/Ft Worth). What does this tell you about migration patterns between the two states?
|Above From Illinois TO Texas|
|Above From Texas TO Illinois|