Kling on free parking

by on August 16, 2010 at 7:29 am in Economics | Permalink

Arnold isn't convinced:

If we abolished free parking, would parking spaces be scarcer? Keep in mind that if the price of parking went up, this would cause movement along the supply curve as well as along the demand curve. Maybe the total number of parking places would decline (it depends on elasticities), but the one result you can predict with certainty is that the number of unused parking places would go up. Is that necessarily welfare-improving?

The key is not to "abolish" free parking, but to a) abolish minimum parking requirements, and b) put prices or higher prices on congested municipal-owned parking spaces.  Both a) and b) will lower the demand for parking and a) will lower the supply of parking, so why should the number of unused parking spaces necessarily go up?  If you treat something as an appropriately scarce resource, it should be used more effectively.

There are plenty of DC restaurants which don't have their own parking lots, but they use paid valet parking and find ingenious ways to store cars more effectively.  The parking fee means that some people walk there or use the Metro, rather than driving and parking.  No one finds this arrangement especially objectionable and while valet parking is at a discount to market still it is priced.  At lunch time valet parking is less likely but still people pay to park, usually in nearby lots.  No one would suggest that these restaurants be forced to put in minimum parking.  Nor would anyone suggest that mandated minimums would be neutral with respect to parking efficiency.

I'm simply asking for the same switch in reverse, namely to do away with minimum parking requirements.  Very likely, such a change will have a bigger impact on future developments than on past developments (it can be hard to reconfigure a parking lot), although some malls might sell off or rent their now-liberated parking spots to other commercial ventures.

Pricing parking on busy residential streets is just common sense S&D and the price should vary with peak times.

Most of all, I am calling for "parking recalculation," so I am surprised Arnold is skeptical.  Maybe he thinks the recalculation won't bring much change (the Wal-Mart in North Dakota may never charge for parking), but in fact we find a wide variety of parking pricing practices around the world and even around the U.S., as laws and institutions and real net prices vary.

You could argue that politics already pushes us to somewhat efficient outcomes for policy, as indeed NYC does usually (though not always) treat parking spaces as more scarce than does Fargo, North Dakota.  Still, there is an obvious chain for political failure.  Development decisions are very often made on a one-by-one, sequential basis.  Other merchants, or nearby homeowners, fear parking overflow and they lobby as if this private cost were actually a social cost.  At each step of development, lots of parties are pushing for minimum parking requirements.  Some "once-and-for-all" parking policy decisions could limit this political incentive. 

Another simple public choice story is this: minimum parking limits the supply of land and boosts the returns to local homeowners.  It raises retail prices but many of the store's customers are from out of town, so that is a vote-winning strategy at the local level, namely scarcer land and higher prices for stores.

People who drive cars also have disproportionately more political power than people who do not, especially in most suburban areas.

Most of the time, legal quantity minimums have real effects on markets and they are not set efficiently at the political level.

Addendum: Here is Arnold's response to Robin, here is Robin on Arnold.  And yet more from Arnold.  And here is an O'Toole comment; for one thing there is free parking in Manhattan, but for another…I never claimed there was.

From the comments: "A note of clarification about free parking in Manhattan. By law meters are prohibited on residential streets. Only on commercial streets and corners are meters allowed. Residential parking permits are also prohibited by the state. This means that in many parts of the island (mostly above 59th street though also in certain areas of lower Manhattan) there is "free" parking at the curb. In these neighborhoods there is substantial cruising for parking. In addition, all of Manhattan was subject to minimum parking requirements until 1982, and now areas north of Central Park (roughly) are subject to minimum parking requirements, as are the other boroughs."

James Joyner August 16, 2010 at 8:19 am

I think you’re mostly right but there is the issue of externalities. If a hundred people live in an apartment building that doesn’t provide parking, they’re going to be taking up valuable street parking and making it much more difficult to patronize local bars, taverns, and shops. Ditto businesses which employ, say, 35 people but don’t provide them a place to park.

Mike Huben August 16, 2010 at 8:38 am

Once again, the Austrian style of thinking: no numbers, lump all existing minimum parking regulations together as if no community paid attention to any economic facts, tell lots of stories about how regulation could be failing without measurement, and (best of all) never compare that to possible market failures.

Isn’t it funny that Houston, notoriously unique for not having zoning, does have regulations for free parking requirements?

Tyler brings up an example of DC restaurants using valets and nearby expensive parking lots. Besides being a fine example of “let them eat cake”, doesn’t it occur to Tyler that DC city planners have ensured that strategy is possible in collaboration with the owners of the properties?

“Most of the time, legal quantity minimums have real effects on markets and they are not set efficiently at the political level.”

OK: how inefficient are they most of the time (give me a real, data based number) and how much more efficient have market-based alternatives proven to be? Especially in the case of parking. Oh, and be sure to include the concerns of Karkain:
“While zoning does have significant effects on the market values of individual parcels, and larger-scale economic consequences as well, a complete cost accounting must also consider zoning’s role in protecting crucial, non-monetizable values. These include each homeowner’s surplus in his or her home, as well as neighborhood residents’ interest in preserving the unique set of common neighborhood resources—the neighborhood commons—upon which they rely. Far from being trivial, or mere ancillary values, “home” and “neighborhood” are central components of our identities. Precisely because these values are notoriously insusceptible to objective valuation, we afford them property rule protection in the form of zoning laws.”

It’s amusing to me how weak Tyler’s continual stream of propaganda is. It never has to be stronger than needed to appeal to the confirmation bias of his libertarian readers.

Josh Fulton August 16, 2010 at 9:18 am

I can’t believe O’Toole says there’s no free parking in NYC. Talk about not knowing your cities.

RMG August 16, 2010 at 9:29 am

Um, not to bring up a touchy subject, but when I noticed the statement that “as Professor Shoup puts it: ‘Who pays for free parking? Everyone but the motorist’,” I thought of a past parking situation (see http://tinyurl.com/2afm7hh) and its background (http://tinyurl.com/2cdx3q2). It’s interesting to hear broad agreement on the topic of parking.

E. Barandiaran August 16, 2010 at 9:41 am

Tyler, have you ever done a study of parking in any town or county? or at least have you reviewed a study done by someone else? can you explain parking regulations and practices in your own county? can you refer to a particular local government decision on a recent development in your county? can you tell us what regulations and practices are used in your university?

Morgan Warstler August 16, 2010 at 10:39 am

It sounds like just another reason people will move elsewhere. North Dakota near the WalMart? Certainly if NYC was cheaper, more people would live there.

And then as some people leave, some other price, say apartments goes down down. Do they then move back?

I like the policy, but I like it as another revenue stream to replace a cut in Corporate taxes. We don’t need a dime more revenue.

Rob August 16, 2010 at 10:55 am

I’m surprised no one here has brought up Seinfeld. Remember the episode “The Parking Space”? Where George and Mike fight over a parking space outside Jerry’s apartment? Or the episode where George compares paid parking to seeing a prostitute? “A garage. I can’t even pull in there. It’s like going to a prostitute. Why should I pay, when if I apply myself, maybe I could get it for free?”

O’Toole arbitrarily puts-down Schoup for having a “parochial view” of the city where he lives. Can it not be argued that O’Toole has a parochial view of the small-town where he lives? After all Dr. Cowen has already defied the challenge to find ‘free’ parking in Manhattan.

Chris August 16, 2010 at 11:24 am

An interesting contrast here in North America is the city of Calgary. Calgary has enforced parking spot maximums on new developments for over 20 years, not minimums, ostensibly to try to get more people to live downtown. The results have been very unsuccessful:
1) minimal increase in the number of people living downtown;
2) the second highest parking rates in North America (behind Manhattan); and
3) as a result of #1 and 2, overcrowded transit.

Nobody’s happy with the resulting situation. It would make an interesting case study.

KingM August 16, 2010 at 11:32 am

“why do klingons need free parking?”

It’s not free parking for Klingons, it’s Klingon-free parking. I thought we’d made our peace with the Klingons, but apparently racial profiling is still okay. It’s disgusting.

Slocum August 16, 2010 at 11:52 am

Pricing parking on busy residential streets is just common sense S&D and the price should vary with peak times.

That one’s a little dicey. Obviously, people with homes on city residential streets didn’t get parking as part of the deed to the property. But it has clearly been a de facto part of the deal. So imagine the city puts up the street up for bid and the high bidder is a company that puts in 24/7 metered parking and does not offer long-term leased spaces. Suddenly any home on that street without a driveway and off-street parking is substantially less valuable than it was before.

RJ August 16, 2010 at 2:00 pm

If you’re not a foodie, why bother to eat in a place that is difficult to get to?

Samuel Torfi Petursson August 16, 2010 at 3:48 pm

“An interesting contrast here in North America is the city of Calgary. Calgary has enforced parking spot maximums on new developments for over 20 years, not minimums, ostensibly to try to get more people to live downtown. The results have been very unsuccessful:
1) minimal increase in the number of people living downtown;
2) the second highest parking rates in North America (behind Manhattan); and
3) as a result of #1 and 2, overcrowded transit.

Nobody’s happy with the resulting situation. It would make an interesting case study.”

Point 1 may well point to a major barrier in applying maximum parking standards to boost densification: developer’s angst. A developer always seeks to maximize the attractiveness of his development (maximize ROI) and minimize the risk of delaying sales. So even though a development with fewer parking spaces allocated with it may lower the developers’ cost per unit, he may very well find it too risky to engage in the investment. In this scenario, the authorities need to work proactively with the developers and find ways to minimize their risks and boost the attractiveness of investing in a maximum parking space zone. If not, they invest on lots outside the zone, and may very well have been doing so the last 20 years in Calgary (and perhaps elsewhere).

Point 3 points to another authority failure (and an obvious one): increase public transport. This, I would say, is a primary prerequisite for a general switch from minimum to maximum parking standards in any city.

Do municipal authorities collect property tax on parking facilities? In Europe they do to some extent. Don’t know how it is in the States. My point is that municipal authorities may very well have an incentive to maximize parking facilities (to increase budget income per development) and, perhaps more importantly, let the Federal Highway-building Transport Authorities suffer for the increased traffic (not their business). Decreasing parking increases the need to invest in public transport (their business). Perhaps city authorities have the biggest incentive to apply minimum parking standards after all?

John August 16, 2010 at 4:29 pm

I would also like to add that I see parking requirements as very similar to other zoning laws and would like to see an orderly dismantling on most land-use restrictions and requirements, in all cases where you can’t seriously convince me that doing so would kill babies or something.

Seth August 16, 2010 at 5:44 pm

John – I think you helped me clarify my point. Thanks.

I certainly don’t hate free markets. I think the reason absolutely free markets in parking don’t exist (though I think they are closer than many things with government involved) is because free markets in roads don’t exist. The parking requirements are there to prevent businesses from free riding their customer parking on the public streets, which would require more public money for street construction or clogged streets. I think the parking requirements are there to fix that problem and that doesn’t seem to be considered.

DanC August 16, 2010 at 6:18 pm

John

Tyler’s point is that parking is “free” and that charging for it would lead to all sorts of wonderful benefits. See his NYTimes piece.

But is there already a market and is Tyler just missing the rules of the market?

The North Side of Chicago has limited parking and those brave business who supply parking also negotiate with towing pirates, who are often recent graduates of a charm school in Joliet, to enforce parking regulations. Not every community has a fleet of tow truck drivers at the ready to enforce restrictions. (For many years one towing firm rented a sign with their name on it to merchants, the mere presence of the sign was enough to strike fear into the heart of most visiting suburbanites.)

Parking is a good where the ability to create a private market is often difficult. While in some markets private garages are created to fill demand (and they are taxed by governments) it is far from clear, to me, that every community could negotiate an optimal outcome absent government intervention. The free riding problem becomes an issue.

Again Chicago offers an example. After a major snowstorm people will dig out a parking place, on a public street, and attempt to save, or place dibs, on the location by placing an old chair or some junk as a signal that the location is now reserved. Allowing dibs encourages the clearing of snow but it is not recognized other then by informal agreements. The practice and the steps taken to enforce the rules vary by community. On net is it a good thing? The police only care if it creates a violent outbreak.

Or look at Philadelphia where a small army constantly imposes hefty fines (especially in Center City and University City). Is this activity costless? To the degree the targets are tourists and students, does the community really care? How many other sections of the country have the same mix.

If the government prices municipal lots above the market price, private garages will enter the market. A better solution is just raising parking taxes on all lots and sell the municipal lots.

In general, I dislike government interventions and the market distortions they create. With parking I don’t see the potential benefits that Tyler does, nor do I see great harm. It is like setting the minimum wage at $2.00, who really cares

kb August 17, 2010 at 1:53 am

Randal O’Toole *really* likes cars. All of his arguments follow from this proposition.

Ryan Vann August 17, 2010 at 7:12 am

I fail to see why a resident with parking needs would chose to live at an apartment with no parking accommodations. This isn’t a case where the acting agent isn’t 100% accurate at internalizing economic costs, but a giant lapse in common sense. It is entirely possible someone might misjudge the amount of available parking, but at some point in the apartment tour, the subject of parking aught to have come up making it neigh inconceivable that a tenant would agree to live in a place with zero parking.

Ryan Vann August 17, 2010 at 10:19 am

Noah,

Are there no taxi or bus services, or are they priced prohibitively high. Were they available at a sub $10 cost, would you be inclined to use them?

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