Travelers who rent cars frequently may wonder why the same four-door midsize sedan has a drastically different price tag depending on where the car is rented.

The cost of doing business in different markets is a big factor — including labor, real estate and the price to insure a fleet of cars. Varying tax rates can also affect the final bill, especially in places that levy special taxes on car rentals.

But the number of car rental companies that serve a particular market also plays a significant role in price. And competition is a growing issue as the industry consolidates and leaves just a few dominant companies that each own several car rental brands.

Jonathan Weinberg, president of the car rental agency AutoSlash.com, analyzed September midweek rentals booked through the site and found customers were paying about $97 a day in New York City, including taxes, versus $40 in Las Vegas and $45 in Miami and Los Angeles.

“In somewhere like Los Angeles, you have so many different vendors at the airport, and many are low-priced value providers,” Weinberg said. “There’s so much competition for customers, it tends to drive prices down.”

In Miami, which recently built a combined rental car center near the airport, 16 companies compete for customers, including more than half a dozen discounters like Payless, Advantage, E-Z Rent-a-Car and Ace. Being in the same place puts the low-priced providers on more of a level playing field.

Deals on wheels

Local taxes are another important variable in price differences — and one that has been getting more scrutiny as the travel industry fights municipalities that tax visitors to help pay for new stadiums and other projects that do not necessarily benefit travelers.

A study of travel taxes published in the spring by the Global Business Travel Association, an association of travel managers, found that Chicago O’Hare, Boston Logan, Las Vegas McCarran and Kennedy airports levied the highest taxes on car rentals — adding 20 to 25 percent to the base price of the car.

Despite this growing tax bite, one bit of good news for travelers is that car rental rates have actually declined from their 2009 peak.

“It’s not like the price of a car is dropping through the floor — it isn’t,” said Neil Abrams, president of the Abrams Consulting Group, which advises car rental companies. “Rates are below what they were, but still relatively high on a comparative basis.”

According to the group’s weekly survey of rental prices, the average rate for a midsize car at 10 major airports in mid-August, for example, was $85, not including taxes or fees, compared with $93 at the same time last year. In 2009, the price was $103, roughly the high point for rates in the decade the survey has tracked prices charged by the major car rental brands. (The Abrams index does not include discounters like Payless.)

The reason for the recent price decline is not weak demand: Avis Budget, Dollar Thrifty and Hertz all reported positive earnings in the second quarter of 2011, in part due to increases in rental days. But with a strong market for used cars, rental companies have been making money selling their older vehicles, so they have not set prices as aggressively as they did when the recession hit.

“There’s an incentive to buy cars, maybe even more cars than you can rent at an optimum price because you know you’re going to make a lot of money at the back end,” Abrams said. “That has a muting effect on rental pricing.”