Thursday, March 03, 2011

[azvajbdi] Tow truck ransom

Towing companies seem to be legally permitted to hold your towed car ransom.  Are there market forces at work to determine the correct ransom value?

If not, regulation would be needed.  But even if they are regulated, what is the correct value to induce the optimal number of tow truck companies to set up shop?

Suppose we regulate the ransom to 0.  The tow truck companies charge the entity that hired them (frequently the state) a fee for towing, and it is up to that entity that hired them to bill and collect that fee from the owner of the car.  A legal framework permitting this.

But, we still lack market forces enticing the entity that hires to hire the towing company with the smallest fee.  The person who hires is not the person who pays.  Perhaps the legal framework should be that the hirer is required to pay a portion of the fee?

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