On a recent visit to New York, my friends took me to a popular part of Queens to an Indian restaurant. Because it is a popular area it was very difficult to find a car parking space. We ended up driving round in circles for 15 minutes before a space finally became available. When we finally parked, I was surprised to see there was no charge for parking in this busy area.
Diagram showing Excess Demand when Price is Zero
If price is £0 demand (Q2) is greater than supply (Q1)
I suggested to my friend it would be more socially efficient if there was a charge for parking.
Because it was free to park, demand was greater than supply. This shortage caused:
- Time wasted
- Stress of looking for car parking space
- Congestion on the roads as many drivers are just driving around looking for a parking space.
- More pollution as drivers create more fumes driving around looking for a space.
- It can put people off visiting restaurants because a perceived lack of parking can become a disincentive.
Advantages of charging for parking
- It would encourage people to consider other forms of transport for getting into the area.
- People might use public transport or even cycle.
- Lower emissions from cars driving into centre
- The money raised from car parking charges could be used to offset other taxes or spend on improving public transport/bicycle lanes e.t.c.
- People might walk or cycle a bit more. This would be one way to deal with obesity issues in the West.
Yet, the response of my local New Yorker friends was that ‘they didn’t want to pay another tax’. They expected free parking and think of free parking as an entitlement. They didn’t really like driving around looking for a car parking space, but they definitely don’t want to pay.
Some might say car parking charges would favour rich people who would be able to afford to park in the city centre. Certainly, rich people wouldn’t be discouraged by a small parking charge. But, concerns about equality should not be dealt with through the price of car parking. We don’t reduce tax on cigarettes just because cigarette tax is highly regressive.
Amsterdam pedestrianised many areas of their city centre and made car parking very expensive. As a result, 40% of people cycle within Amsterdam, and they seem to enjoy it. (cycling Holland)
In a way car parking charges can be an effective ‘mini congestion charge’ By raising the cost of driving into city centres it makes people pay the full social cost and not just the private cost.
The high cost of free parking
“Who pays for free parking? Everyone but the motorist.”
– Professor Shoup
Professor Donald Shoup wrote a book The High Cost of Free Parking which examines the social cost of free parking in the US.
He noted that land reserved for car parking space has a very high value, yet we give it away for free. He measures the value of a Los Angeles parking space at over $31,000. As Tyler Cowen notes in a review of Professor Shoup’s work. “If we don’t give away cars, why give away parking spaces?”
Professor Shoup estimated that the value of the free-parking subsidy to cars was at least $127 billion in 2002
- Free parking comes at a price – New York Times
- Economics of free parking – Tyler Cowen
- Free parking comes at a price – Mark Thoma