This past week I gave a couple of lectures at the annual Seminar on Austrian Economics at the Foundation for Economic Education. Richard and Anna Ebeling are doing a great job turning FEE into a beehive of activity.

To get to FEE from the airport, I rented a car. To save money, I used Hotwire. Hotwire gives you lower rates on car rentals than any other site I know. The unique feature is that you prepay before you know which company from you’re renting from. That way the companies can offload leftover cars at deep discounts without making the lower price visible to their customers who are willing to pay a higher price. It’s a clever price discrimination scheme. (They also use it for hotels and airlines.) The set of car rental companies is limited to Alamo/National, Avis, Budget, and Hertz, so what’s the risk?

I’ve rented many times from Hotwire without any reason to complain. This time Budget gave me what had to be the worst car on its La Guardia lot: a bright yellow Chevy Aveo without a CD player, power windows, or power locks. The guy who checked me back into the lot and the end of the rental was amazed – he said he’d never seen a car without a CD player.

If I had reserved through Budget directly, you figure they’d be reluctant to give me such a car, for fear of losing my future business. Normally they’d give me the best car of those available in the size class I’d reserved. But for Hotwire customers, Budget may figure: even if he’s unhappy with the car, he can’t use Hotwire and choose to avoid us next time, because he won’t know who he’s about to rent from next time.