Price of Car Parking in City Centres


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.

Equity issues

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


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5 thoughts on “Price of Car Parking in City Centres”

  1. Pingback: Oxford Parking Charges on Sunday | Oxford Light
  2. I find myself similarly confused by employers who seek to champion the cause of environmentalism and sustainability, perhaps employing a sustainability officer or similar, and then spend hundreds of thousands of pounds on free or subsidised urban parking facilities for employees, while offering no such benefit or incentive to non-permit holders (maybe subsidised train tickets or a free bike every year?).

    My employer charges for parking permits, but they cost roughly £1000 less than the standard rate for a space in the same inner-city multi-storey carpark. Surely market forces would decide on an appropriate going rate for parking in a certain area? Then an employer might attempt to modify employee behaviour by finanacially incentivising more sustainable – and in the case of cycling, healthier – transport. At present they have it in reverse.

    The only reason I can fathom is our western culture, where car ownership and use (including parking) are seen as some kind of god-given right, and any suggestion of a charge is seen as an attack on personal freedoms. All this despite inconveniences like congestion and parking delays, and despite the very real damage done to our health, both through lack of exercise and road traffic collisions (more deaths than 9/11 every year on UK roads).

    Brian Wilson’s interesting observations of Amsterdam cyclists ( ) perhaps tell us as much about the San Francisco attitude to cycling as they do the Amsterdam way of life. For instance, he seems to me slightly shocked – albeit pleasantly so – as he points out sights such as “a woman in a gleaming white dress, pearl necklace, and purse who is going shopping – on her bicycle”.

    Having just visited Oxford for the first time (with my bike) it was great to see so many bikes. The memory of the view of the bike park at the station when I got off the train is still making me smile!

    Sorry, got a bit carried away and gone on longer than intended!

  3. Oh, and that’s £1000 pounds per year for clarification. The fact my employer spends more on permit-holders than me just niggles me!

  4. Shows how you can misuse statistics. Over half – 60% – of people in Amsterdam don’t cycle. Cycling is also not practical for many people, and mobility badges can take months to get. The smoking example is insane.

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