My family and I spent a sabbatical in Toulouse, France in 1997. One of the first frustrations we experienced was the attempt to exit a pay parking lot. At the entrance we had obtained a standard-looking ticket from a machine. At the exit we expected pay an attendant using francs or a credit card, but none of the lanes was attended. After a few minutes we began to honk the horn, and finally a nice gentleman appeared and explained that we should have gone to a machine inside the shopping center, put money on the ticket first, and then exited the parking lot by putting the ticket in a machine at the exit.
This system is of course now standard in the U.S., but we had never come across it 9 years ago in the States.
It turned out that use of credit cards / electronic methods of payment was far more widespread in France in 1997 than in the United States. One could put a 35 cent highway toll on a credit card. Or a $2.50 bill at McDonald's.
My speculation at the time was that the greater investment in physcial capital -- machines -- to read credit cards, tickets, and so on, rather than the use of low-skilled labor to process payments manually, reflected the relatively high minimum wage in France. This seemed perfectly consistent with standard economic theory. A law that raises the price of one input should encourage substitution to other inputs. At the relatively low minimum wage in the U.S., it made sense to use people for low skill tasks. But at the higher minimum wage in France, it was cost-effective to invest in labor-saving capital.
Yesterday, however, my family and I stopped on the Autoroute to fill the car with gas. The line was incredibly slow. And the reason was that one could not use a credit card at the pump: one had to fill the tank and then go inside the station to pay (with cash or a credit card). This is the opposite of what makes good sense given high minimum wages, and it seems inconsistent with the widspread use of credit cards elsewhere in the economy.
If anyone has an explanation for this puzzle, I would be glad to hear it.
THis is just a way to make you go inside the station in order to buy something else.
Posted by: Leonardo Monasterio | July 11, 2006 at 07:50 AM
The reason France has had credit cards widely used before the USA is ... intellectual property :).
USA made a political decision not to pay for the french industry owned patents involved (these patents expired not long ago IIRC).
Plus the french state did a big push to modernize the french banking system for customers.
Autoroute gas station sector has only recently been open to competition, if you read french, here is what the CEO of a big retailer (Leclerc) has to say on the topic:
http://www.michel-edouard-leclerc.com/blog/m.e.l/archives/2006/03/carburants_quel_differentiel_d.php
http://www.michel-edouard-leclerc.com/blog/m.e.l/archives/2006/01/carburants_les_stations_sur_au.php
Gas is only 10-15% of revenue of an autoroute station according to him.
Also, I suspect that the no automatic pay is encouraged by public authorities to force drivers to take some rest. Free toilets, baby rooms and water is mandated by state for autoroute gas station. (Leclerc states that they distribute two times more free water than gas).
Last weekend was the big yearly road weekend (beginning of summer break), so it's not unexpected to have all systems saturated.
Posted by: Laurent GUERBY | July 11, 2006 at 10:41 AM
"Gas is only 10-15% of revenue of an autoroute station according to him."
Really? I know that gas tends to be very low margin for gas stations in the US, and they tend to make the vast majority of their profits from the convenience store-type items, but only being 10-15% of *revenue* in France is surprising.
Posted by: John Thacker | July 17, 2006 at 09:42 AM
John, it's not in the whole France, only on "autoroute" gas stations. If you see one you'll understand: they're more like shopping malls than gas stations :).
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