Edited by André de Palma, Robin Lindsey, Emile Quinet and Roger Vickerman
Chapter 31: Parking Economics
Richard Arnott INTRODUCTION For many years, transport economists slighted parking, treating it simply as a fixed cost added on to the end of a trip. That has been changing. Not only is there a growing literature on the economics of parking, but also urban transport economists are coming to recognize parking as an essential element of the urban transportation problem and urban economists to realize its importance as a land use. In a world without distortions, the economics of parking would be rather straightforward, following basic economic principles. But there are many distortions associated with parking or related to it. Most shopping center parking and employer-provided parking is free, and most curbside (on-street) parking is underpriced. The demand for personal parking is derived from the demand for auto travel, and urban auto travel is generally underpriced due to the absence of congestion pricing. Parking garages and parking lots are discretely spaced. The friction of space then confers market power on private suppliers, which they exploit by pricing above marginal cost. The price differential between on- and off-street parking induces cruising for curbside parking, which contributes to traffic congestion. As a result of these and other distortions, parking policy is very much an exercise in the theory of the second best. Almost all parking policy is local. Since most local governments lack the resources and expertise for systematic data collection and internal policy analysis, most parking studies are done at the neighborhood level by consulting firms, based on accepted but often...
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