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The Market for Parking Spaces

In this post I will be exploring the possibility of viewing parking spots as a market. Anyone who has tried to park on the street in a city will recognize that by leaving a spot to use their vehicle, they are forfeiting their spot, and will likely have to search for a while to find another. In essence, they are exchanging their good (the spot) for the utility of the use of their vehicle. In most cases, they are not exchanging that space with a particular individual, but rather the pool of people without a space. I would argue that the two pools of people, (those enjoying the utility of their vehicle, and those currently occupying a space) can be viewed as two “agents” in a parking space trading market. Of course, not everyone driving is looking for a space, or already has a designated space for them, and thus these people are not participating in the market. People could also give their spot to a friend, but we will ignore that possibility for the sake of this market. A monetary value could be placed on parking spaces, in that once someone forfeits their spot, they run the risk of not finding another one later and being forced to pay for a spot in a garage or paid lot. (The value would be whatever the local rates were). Some cities do employ meters (or more recently kiosks), where people do pay for street parking, but it is significantly cheaper than using a garage.

There are a few tradeoffs to be considered in this market. Street parking can be more convenient because of the parking space location, and the instant access to the road, (as opposed to driving up and down six levels of a parking garage looking for a spot). Those parking on the street have a higher risk of damage to their vehicle, and being ticketed for not paying the meter in time. There are several other factors that may sway people in the looking-for-a-spot pool to choose one over the other, and it make it an interesting topic to study.

A design choice in this market is the free-for-all nature of street parking. In most cases, people do not have reserved spots, and in a city full of people, there is almost always someone looking for a spot somewhere nearby, which makes the time that a spot is vacant very short. It makes for effective allocation of goods, as the utility of having a spot is not being wasted by leaving a spot vacant for an extended period of time. The change from free to paid parking on the street does not really affect the rate at which spots are filled. People in the city are desperate to park, and paying a small fee is usually not a problem. A change that would drastically affect the market would be removing street parking altogether. This would drive the value of the paid spaces in lots and garages way up. (So if you are on a city board, and own a garage, you might have some thinking to do…). This, however, would not benefit either pool. Those in a spot would not want to use their car for fear of not finding a spot in the now crowded garages. Those using their car would have to search for longer and drive farther to find an empty spot. Thus, the market is operating rather efficiently, despite the fact that it still may be a pain to find a spot sometimes.

 

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