Why is Parking So Weird?

Updated: Oct 30, 2021

Why is parking so weird? I conjecture that it is weird in places where it needs to be less weird but the place reinforces the weirdness. In other words, the inefficiencies of the roads and congestion in areas like downtown, major cities, and the like are significantly influenced by the cluster of businesses in a specific area and people driving around trying to find parking. Whenever I, unfortunately, find myself stuck in situations like these, I can't help but ask, what is the current parking structure producing and/or reinforcing? The most obvious is a general uneasiness or anxiety about one’s vehicle whose second-order effects are pedestrians zipping in and out at traffic lights, some in a hurry to wait for the countdown. It contributes significantly to traffic by allowing for shorter intervals between the green and red lights due to the number of pedestrians in these areas; thus creating longer and longer lines of traffic. It also produces shorter times in buildings and stores. This could be a good thing as the places with more horrific parking are usually busy centers like universities, malls, downtown areas, and such. It, however, reduces the chances that people stay in stores long enough to buy that extra good that they would have bought otherwise. I doubt the economic gains from this are massive, but they could be substantial to a city in taxes. Or at the very least, a local government. Further, it changes people’s perspectives on tickets. When the situation is just right, it incentivizes individuals to treat tickets as taxes or prices paid to park in a certain area instead of viewing tickets as punitive measures. It could also encourage poor parking although I assume that personal property considerations minimize this effect. For some people skip the driving altogether and use ridesharing apps or public transports. Essentially, it significantly contributes to the general feeling of a "downtown area."

So what should be done? I suggest that parking becomes all-or-nothing or coasean. In the all-or-nothing approach, there should either be a flat tax on every parking area or there should be none at all because people will always go for the cheaper option! Law of demand, anyone? Meaning why pay the tax for parking when you could potentially park a bit farther, for free, and walk to your location? This solution is not optimal, in the slightest. The thing is, spaces are finite and people would rather take the chance of free parking than park in locations where they have to pay. If every area was taxed, which is relatively easy to do using parking meters, people would make the decision earlier to either drive or rideshare thus reducing the number of cars on the road. In other words, with the tax, individuals would either find an alternative if their demand curves for parking are quite elastic or would just pay for parking if their curves are more inelastic.

The Coasean solution is more tricky to implement but is in fact, socially optimal because it takes advantage of personal interests. The Coasean solution goes thus: privatize parking lots! To implement this, the market would need the following: agents must be small enough to compete, but large enough to set prices. In essence, giving them a monopolistically competitive structure. This structure allows private entities to internalize the “cruising for parking” externality while allowing for efficiency.

At the margin, unless you’re a tourist, decide earlier to either pay for parking like parking in ramps and such, or rideshare.

Certainty Rating: 67%


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