THE ECONOMICS OF SHORT‐TERM LEASING

Abstract

Short-term leasing is an everyday occurrence. Tax savings cannot account for the ubiquity of leasing by temporary users. Monopoly explanations are inconsistent with concurrent leasing and selling markets for perfect substitutes. Leasing economizes upon the costs of detecting, assuring, and maintaining quality, costs of search, and costs of risk-bearing. This view is based on standard economic reasoning and has numerous specific implications.