Someone should study this phenomenon

Seems like an interesting result, doesn’t it?

Hotel prices have surged in key European cities as hundreds of thousands of tourists flock to see the first total eclipse visible from the continent this century.

Iceland’s capital, Reykjavík, has seen one of the biggest jumps in hotel room prices, being one of the few accessible locations to see the full eclipse before evening on Wednesday.

Tourists there have been shelling out $793 (£587) on average to secure a room on Wednesday, a 98% jump compared with the same day last year, according to data from the travel and hospitality data group Lighthouse Intelligence.

Rising demand meets an inflexible supply. Something has to change and it’s the price.

Note that the supply is only inflexible in the short term. Clearly it’s possible to build more hotel rooms but that would be something of a delay in meeting demand right now. This does seem like something worth studying. Possibly even formalising. We might end up with something like this:

Would be interesting to see the effect of such formalising of course. For we might find that the effects worked the other way around too. Say, that prices are rising, we’d prefer they didn’t, therefore we increased supply. That could have all sorts of applications, no? Like, say, if housing is becoming expensive then the solution is to build more housing.

We’re just musing, of course. For until someone does start to really study this phenomenon we’ll not really know, will we?

Tim Worstall