Arguably: because if customers keep movies past the due date, then it's not just that the video store can't rent it to someone else. It's also that the reputat

Arguably: because if customers keep movies past the due date, then it's not just that the video store can't rent it to someone else. It's also that the reputation of the video store will worsen, since other customers will find that they tend not to have good movies in stock. (In other words, it's worth more to the video store to rent a film to two customers for one day each than to one customer for two days.) So, the per-day opportunity cost to the video store goes up as each day passes. Sure, they could just charge the customer an increasing per-day overdue rate. But that's basically the same thing as having late fees anyway.