There is no such thing as free lunch (or parking)

Exquisite Tyler Cowen in the New York Times today, about how we pay much too little for parking.  Parking isn't really free, but when we pay nothing for the marginal use of a parking space, it causes us to use land, cars, and generally structure our whole lives in grossly inefficient ways.

His article was inspired by a book by Donald Shoup.

So, this reads like an advocacy piece for higher parking fees and, perhaps implicitly, market pricing of everything.  Okay, I might be able to get behind that.

But the more interesting question is, why is parking so often free?

First, I'd like to point out that when parking costs get really expensive the price does go up.  I know some prime parking spots in DC can cost $50,000, and $25,000 is commonplace. Some parking spaces in Manhattan cost more than houses do in other parts of the country.

So, the free parking we're talking about is also the parking that generally tends to be less costly to provide.  Yes, I also imagine that parking is implicitly subsidized via regulations and building codes.  But the problem with presenting the story in this way is that it paints the free parking space as a kind of conspiracy concocted by those evil government interventionists.

I expect it's a lot more complicated.  When parking is inexpensive, and almost everyone would be willing to pay the price anyway, the transactions costs of paying can get to be pretty high.  It just isn't worth it to set up a mechanism for charging each person each time.

Now, if you're in a generally low-cost environment like this, and the collective interests decide it's not worthwhile to charge for parking and instead fold the costs in somewhere else, it tends to raise new issues that can be a pain to deal with.  For example, a new condominium complex or new office building may open up and decide it might shirk its responsibility for parking provision.  After all, it can simply free-ride on the "free" street parking or that provided by other buildings nearby.  Thus, it's not surprising that regulations crop up that force new developments to provide parking.

The most egregious free parking situations are probably those in areas that have experienced rapid development.  LA, where Shoup lives, developed in a inexpensive parking environment where free parking may have been the most efficient organizational arrangement.  Then rapid population growth and congestion followed, and the opportunity costs of parking spaces went way up, making free parking a real problem.  It can take a long while for the institutions to catch up with the new high-cost parking environment.

With any organizational structure there are costs and benefits.  I rather like the idea of charging more for parking more often.  But before we can seriously, honestly, deal with these problems we need to understand and be clear about the source of these crazy regulations.  In the beginning they probably weren't so crazy.  I'm just saying that some plain acknowledgment of that history, rather than a steady drum beat of free market ideology, might be more effective at pushing policy in the right direction.


Popular posts from this blog

Nonlinear Temperature Effects Indicate Severe Damages to U.S. Crop Yields Under Climate Change

Commodity Prices and the Fed