Common Tragedies

Thoughts on Environmental Economics

Zipping up the market

Posted by Daniel Hall on October 31, 2007

I haven’t ever used Zipcar or Flexcar,* but I have friends in DC who do. Apparently, they have agreed to merge. My first thought was, “Uh oh, won’t that create a local monopoly in the car sharing industry?” Apparently, however, there’s actually not much geographic overlap between the two services:

“With very little geographic overlap, the combined company will serve its members by taking the best attributes and features of each company and making a great service even better,” said Mark Norman, formerly Flexcar’s CEO, who will assume the roles of president and COO of Zipcar at closing.

EXCEPT, they do overlap in DC. Won’t monopoly be a problem here? Not according to the press release:

Upon merging, member benefits will include:

– More convenience: Especially in Washington, D.C. and San Francisco (markets where both companies currently operate), the combined fleets will give existing members of each service hundreds more locations from which to choose. …

No worries about monopoly then! Just more locations where you can choose … to pay the same company … more for your car?

I suspect in reality there is enough competition from traditional car rental services to prevent car sharing companies from actually exploiting market power. Any thoughts from those who use these services? Are you excited or worried?

Addendum:  Felix Salmon has more.  He confirms my suspicions that traditional rental companies are moving into the hourly service niche.  He also says that Zipcar members should be particularly pleased with the merger since they’ll be getting Flexcar’s superior insurance.

*This is because I own a car, because I’m an environmental economist, not an environmentalist.**

**That was a joke. Sort of.

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