Friday 30 August 2013

Parking Market Failures

Does any market failure argument justify parking minima? Many cities require that residential developments include some minimum number of off-street carparks. Can these be justified?

Well, I'm glad you asked, Agnito.

The best argument I've heard for these regulations is that on-street parking is rivalrous and non-excludable. If you have an apartment building with too few carparks, residents will park on the street or might keep flitting between a few different no-parking zones, staying one step ahead of the enforcement officers. A lot of people see paying for parking a bit like hiring other kinds of personal services: why pay for it when you can apply yourself and perhaps get it for free? And if you find the perfect parking spot, there's then a huge opportunity cost of leaving the space: people with really good parking spaces never give them up. Finding the perfect space can be a joy to be shared with others. Further, where excess congestion from everyone's free-riding on on-street parking gives incentive for the able-bodied to park in handicapped spaces (or in front of fire hydrants), disastrous consequences can ensue.

Having mandatory parking minima then avoids the free-riding on the on-street parking that could best be left for higher-turnover use. And where long-term on-street parking is discouraged only by time limits, it also encourages other socially wasteful forms of entrepreneurship.

The best response to this kind of argument is that it's massively second-best relative to the more efficient solution: price on-street parking. Do that properly and everything else sorts itself out.

Of course, in that world, Seinfeld wouldn't have been nearly as good. And where Gerry Brownlee wants to ban Auckland from using congestion charging, we might not be able to get first-best parking charges anyway.

For the record though: there is no real-world market failure sufficiently large to justify mandatory parking minimums. At least not in Auckland, best I can tell.


  1. Probably easier to require some parking that fiddle with getting the pricing right. Anyway - while you can change the parking fee, if initially you price too high or too low, you cannot as easily retrospectively magic up a parking space on a built-on section. Since most residences have cars - might as well require the owners to have somewhere to park them. We require residential houses to have toilets and other facilities etc, so its no big deal, (Having said that I know of some local councils that require one parking space per bedroom - seems OTT) But, in your article you mention the Christchurch wunderkind - Gerry Brownlie. I have often been tempted to write about the way in which he has just irritated me again - until I realise that I am irritated because he us doing something that is bound to annoy my ChCh friends, rather than affect me directly. And then I think - but the ChCh people voted for him, so maybe they like what he is doing, or at the least they deserve what he is doing. How about an essay on why the ChCh folk vote for this guy who I (and much of the country) think is a blithering idiot.

  2. I would be interested in hearing your take
    on price discrimination in on-street parking. I can see benefit in having one
    park per block or so cost more, but be more likely to be available for those
    critical journeys.

  3. All the information that you have shared in that post are true and same parking problems people face every day. I am really impressed with you and keep updating new information.

    Cruise parking in Tampa

  4. Developers who build apartment buildings or commercial space with clearly far fewer parks than are likely to be needed push the burden onto everyone else. Of course they should have to build them - it would also create an economy of parks for rent by tenants who chose not to use their won. That, in itself, would help solve parking issues.

  5. That's only true if you don't charge for on-street parking. Why shouldn't I be able to buy an apartment that doesn't come with car parking if I don't want a car?

  6. Yes, you should be able to buy/rent an apartment sans carpark for sure. It's the developers who shouldn't be able to build the buildings without them. Think of the way all those carparks which aren't used by tenants could be re-tasked to alleviate (on-street or other) carkparking demands.

    Letting developers build without them forces a known and (likely) quantifiable aspect of apartment living onto councils (and therefore the public). It effectively means they can build cheaper at some expense to everyone else (even factoring on-street parking is paid for). The demand for carparks is the key here, not the price.

    A side-issue of big city parking cost increases is that they deny people on lower wages the ability to work in the city. The services they work for (cafes, restaurants etc) which "service" CBDs would either have to increase their prices to pay more or lower waged people just get shafted more. People who live in big cities globally despise the parking hassles that comes with those cities yet people seem intent on copying the same things that contribute to them despite all the hindsight available from places like NYC, HK, Tokyo, London etc.

    I totally get the economics argument you make but just think other aspects should also be considered. Apartment developers aren't doing Auckland a favour, they're doing themselves a favour and the cheaper they can build (by omitting carparks) the more they will take advantage of lax rules around developments which don't factor in how existing issues like parking/congestion etc will be added to.