Demand Is High — Let’s Drop the Price
There’s a curious tendency for the portion of peoples’ brains that deals with supply, demand, and price issues to stop functioning when the subject turns to parking. Andrew Samwick has a great example:
Second, my otherwise delightfully governed town has this practice of putting bags over the parking meters around the holiday shopping season. I associate it with the downtown merchants, since the meters north of downtown (say, near my office) remain operational. I can’t figure this one out.
- If you believe that the meters are there to regulate access to the town’s scarce resource of parking spaces, then you need that regulation even more, not less, during the busy holiday season.
- If you believe that the meters are there to raise money for the town, then your best opportunity to get that money is when you know demand will be high, like during the busy holiday season.
Presumably, the reason the town does this is to accommodate a request from the downtown merchants. But why do they perceive this to be in their self-interest? Why does “free (but scarce) parking” attract people to drive to town? Wouldn’t the better marketing approach be “still cheap but available parking,” given that the cost of the parking (about $1 an hour) is still small relative to the cost of whatever the visitors are going to buy?
If it were me, I’d raise the fees during the holiday season (and lower some other local tax). Yet anoSether reason why I will never be town manager.
But the world could really use more town managers like Samwick! Virtually ever town or city in the United States of America could adopt smarter parking pricing policies and suddenly find itself with parking spaces more available, taxes lower, higher retail sales, etc. See also the problems with too cheap parking at Harvard Square.
56 Responses to “Demand Is High — Let’s Drop the Price”
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November 30th, 2008 at 5:18 pm
While I am in agreement with your analysis I thought I would offer up the major argument that the merchants in my town offer for the parking holiday, i.e. that it is unfair competition for them to have to compete with the free parking at the nearby mall and that the town benefits from heeping a commercial downtown alive No doubt they would like the free parking to be year round but feel it is most necessary during the highest volume month of their year.
November 30th, 2008 at 5:22 pm
Matt:
you are ignoring the fact that often, these towns compete with large, big box stores outside of their local tax jurisdiction. If you are struggling as it is to entice businesses to come downtown, then if anything, asking people to put up with congestion as well as parking fees will result in an even greater loss of sales tax revenues.
Now – the question is why charge for parking at all? Presumably it is because most people who are downtown (except during the shopping season) are down town for other purposes (in the case of my small town in Vermont, the district court and other governmental services). So it makes sense to charge then, because more than likely, these people have to be there. But during the shopping season, the majority of people who are coming downtown are going to be shoppers, who have options.
November 30th, 2008 at 5:27 pm
Merchants think that most people can’t recognize a sunk cost. Once they’ve driven to the shopping area and looked for parking…well, they’ve either got to wait for free parking or pay for additional parking because, dammit, they’ve already lost all this time! And once you’ve paid for parking, you HAVE to buy something, because otherwise you just wasted that parking money.
And what lured them into all this? The promise of free parking.
I still fail to understand why a city like New York allows any free street parking at all. Streets are for traveling, and for active loading and unloading. It should all be standing, or maybe–at most–15 minute meters so you can run in and pick up the dry cleaning. The rest should be market rate parking garages. I’ve got to think it would improve traffic flow immensely, and it would also be better for merchants because their trucks could find parking right outside the store to load and unload, any time of day or night. Also, the streets would be cleaner and the sewer systems would have less debris in them.
This is a big winner. Political suicide, but good urban policy.
November 30th, 2008 at 5:31 pm
> I still fail to understand why a city like New York
> allows any free street parking at all. Streets are for
> traveling, and for active loading and unloading. It
> should all be standing, or maybe–at most–15 minute
> meters so you can run in and pick up the dry cleaning.
> The rest should be market rate parking garages.
“The price of everything, and the value of nothing”.
Parking meters with reasonable costs and reasonable time limits (say, 50 cents for an hour with a maximum of an hour) give those citizens who have less money but more time and creativity a reasonable shot at getting a downtown parking space. I see no reason why the ultra-rich should be the only ones able to drive to a downtown that allows traffic. Before Mayor Daley and his parking-lot-mogul friends got to work I could always find a 30-minute, 60-minute, or 90-minute street space reasonably near the Loop with a bit of creativity. Now all such spaces have been taken away, traffic doesn’t flow any better than it did before (since the usable street spaces were mostly in eddies anyway), and the minimum toll for 60 minutes parking is $10. Bit of unfairness there, eh?
Our entire society does not exist to serve the rich.
Cranky
November 30th, 2008 at 5:32 pm
Matt:
where in your equation would charging more for parking result in higher retail sales? If the higher parking would result in more parking available, does this not mean less shoppers?
Now – Harvard Square is an interesting counter-point. But the issue is not too much free parking, as it is too little parking in general. Cambridge would be wise to build a large parking complex to help compensate. It is nothing more than akin to a mall which decides to have so little parking, that people go to the other mall in town because it is more convenient. However, the Harvard Square example alone does not really provide evidence to support your thesis. The fact is, Cambridge’s Harvard Square is so much more than just a shopping mecca. It is a tourist, lifestyle, social, business and shopping mecca. But this is rare for most cities, where their down towns consist of mostly a business/shopping district, which, is usually struggling to compete with the malls.
If you go to most cities where they make parking free, typically, even with the free parking, the downtowns are not exactly bustling with shoppers, even during Christmas season.
November 30th, 2008 at 5:36 pm
My gut feeling is that the dynamic here has more to do with “government” than with parking. Free-parking-at-the-mall notwithstanding, privately owned parking spaces in most downtowns are usually more expensive than street parking, yet there’s no pressure to discount those during peak times. But people tend to view meter fees not as rents paid for use of someone else’s property, but taxes levied more or less arbitrarily on public rights of way, and that they’re entitled to avoid them if there’s a good cause. In my neck of the woods, we see the same arguments made about franchise fees for telecom and utility service, highway and bridge tolls, street-closure fees for construction or events, and so on.
November 30th, 2008 at 5:40 pm
This is a big winner. Political suicide, but good urban policy.
Actually, it’s terrible urban policy. A typical Manhattan street has a cartway that is something like 40-45 feet wide. That’s enough for parking on either side and either a standing/double parked vehicle plus one through-lane or two low speed through-lanes. This is excellent for pedestrians. They are protected from high speed traffic by parked cars, and drivers passing between parallel-parked cars are more cautious than drivers passing between open curbs*. Furthermore, such a street with no parking – or perhaps short term parking on one side only (there’s no reason to expect that ” all … standing, or maybe–at most–15 minute meters” would fill both sides of the street) – would permit either 2 or 3 high speed through-lanes, a literally deadly situation for pedestrians.
This is not to say that the current situation is optimal. However, you should remember that money is not the only currency. The alternate side of the street parking rules impose a cost for resident street parkers, one that causes those with means to store their cars in garages, not on the street. General scarcity – it’s not as if there’s a street spot for every housing unit in Manhattan, or even for every five units – leads others to go without entirely. In other words, you should have evidence of a market failure before you presume that you need to radically change a system.
* To the point that traffic goes more slowly in a 14′ slot between parked cars than in a 12′ slot between curbs.
November 30th, 2008 at 5:45 pm
Brad: “where in your equation would charging more for parking result in higher retail sales? If the higher parking would result in more parking available, does this not mean less shoppers?”
If I may put words into MY’s mouth, the argument would go like this: with free parking, one is encouraged to leave one’s car in a free spot once found. In comparison, with paid parking, one is discouraged from occupying a given parking spot for too long, which encourages parking spot turnover.
In the free case, fewer cars would occupy spots for longer periods, leading to fewer unique shoppers. In the paid case, more cars would occupy spots for shorter periods, leading to more unique shoppers.
November 30th, 2008 at 5:46 pm
I’m not sure that competition from suburban retailers with free parking means that downtown merchants would be better off with free parking also.
For shoppers, uncertainty about how long it will take them to find a parking space, and the possibility that they may need to circle in a busy downtown for quite some time would probably be more of a deterrent to shopping downtown than having to pay a fee but knowing that parking will be available. It all depends on how the shoppers value their time. Properly priced parking is probably welfare enhancing in the aggregate, but would especially benefit those who value their time more highly. Since this is likely the demographic downtown retailers are trying to woo, charging for parking probably would help downtown retailers by lowering the total cost for these shoppers to shop downtown.
November 30th, 2008 at 5:48 pm
privately owned parking spaces in most downtowns are usually more expensive than street parking, yet there’s no pressure to discount those during peak times
I can’t speak for other cities, but here in Pittsburgh the Downtown Partnership lobbies every year for the parking garages owned by the Parking Authority to offer free evening and weekend parking during the holidays. That’s not the same as lobbying private garages, but no one expects private businesses to contribute much to the commonweal (it’s hard enough to get them to do things like all stay open late on the same night, or chip in tiny amounts for dedicated street & sidewalk cleaning that is obviously beneficial to every business).
That said, I think the general idea – that people expect public entities to give the public a break sometimes – is true, for better or worse. Sometimes it’s obviously worse (eg, free park-n-ride at Metro stations during the Inauguration), sometimes it seems likely better (eg, not fining people for leaving their trash out during a blizzard).
November 30th, 2008 at 5:52 pm
You don’t drive, and given where you grew up you’ve never really been a member of the ‘car culture’ so I don’t think you quite grasp the psychology at work here.
The cost of paid parking isn’t thought of in relation to the cost of what you’re buying while parked, it’s thought of in context of free parking, which is why some people will spend 40 minutes driving around looking for a free space instead of paying relative peanuts for a paid space.
Given that, the idea behind the parking meter holidays is to keep people shopping longer. Parking meters generally have time limits — 2 hrs or so. Someone who’s paying for the meter is probably going to do their shopping in that two hour window and then go home rather than stick another couple dollars in the meter. A free meter, on the other hand, is going to encourage them to stay in town and keep spending money.
Might not help the town coffers, but it probably does wonders for the merchants and restaurants.
November 30th, 2008 at 5:56 pm
JRoth: …would permit either 2 or 3 high speed through-lanes, a literally deadly situation for pedestrians.”
Of course, there are other, relatively cheap architectural changes one can perform which would both moderate traffic speeds and protect pedestrians. Wider, tree-lined sidewalks, green medians, etc, would protect pedestrians from speeding traffic while at the same time discouraging excessive traffic speed itself.
November 30th, 2008 at 6:01 pm
Anyway, this discussion seems to be pretty oblivious to the irrationality of the actual people involved. I can tell you that urban merchants are notoriously focused on parking availability, to the dismissal of reality on the matter (basically, unless every customer can park within about 50′ of the front door, the merchant believes there’s not enough parking). Drivers, for their part, value free parking out of proportion with its value – you’ll see radical changes in street parking usage when meters are added or removed, far out of scale with the difference that $0.25 or $0.50 should make in anyone’s decisionmaking.
This isn’t to say that you can’t get parking right using pricing mechanisms; it’s just to say that you can’t assume simple relationships among the moving parts.
Last thing – garage parking, in most times and places, will always be available for a price to those willing and able to pay. The issue for these merchants is how to get the marginal shopper, who does in fact have the option of going someplace where parking will be free and available. Most downtown customers are either transit-based or driving from someplace closer to free parking than downtown is – if they can stop en route at the downtown Macy’s to get something without paying for parking, that’s one kind of attractive; if they have to pay $5 to park, then why not go a bit past their house to the suburban Macy’s to save that $5? Meter parking in most downtowns is hit-or-miss whether it’s free or not; at least if it’s free you’ve got the potential consumer thinking, “May as well stop in town.”
November 30th, 2008 at 6:02 pm
In the free case, fewer cars would occupy spots for longer periods, leading to fewer unique shoppers. In the paid case, more cars would occupy spots for shorter periods, leading to more unique shoppers.
There’s a wrinkle here, though: one of the advantages of walkable downtown retail is that it should permit the kind of comparison shopping that’s not possible in big-box suburban settings without miles of travel. (Of course, the way to encourage this is through well-designed paid parking.)
Now, that raises the question of whether retailers are more comfortable with a model of ‘discrete’ shopping (in which it’s inconvenient to visit competing outlets — the classic big box approach) or one in which customers’ ability to make easy comparisons between similar outlets is a net good.
November 30th, 2008 at 6:09 pm
Of course, there are other, relatively cheap architectural changes one can perform which would both moderate traffic speeds and protect pedestrians. Wider, tree-lined sidewalks, green medians, etc, would protect pedestrians from speeding traffic while at the same time discouraging excessive traffic speed itself.
What’s your definition of “relatively cheap”? To add corner bumpouts on a single block – 4 bumpouts total – costs up to a million bucks*. 120 Manhattan streets (let’s assume we’re not doing every single one) by 8 blocks wide on average, you’re up to about a billion dollars. And all you’ve done is make the intersections safer – you haven’t done anything for the 0.1 mile stretches between them.
And, again, what is the supposed benefit? Getting private cars off the streets, to be replaced with… greenery? Look, I love rain gardens as much as – no more than – anybody, but I’m just not seeing the point.
November 30th, 2008 at 6:34 pm
To add corner bumpouts on a single block – 4 bumpouts total – costs up to a million bucks…
This sounds highly implausible. Link please.
If true, I’ve got to get on the ball with some bids to do them for $900,000 pronto.
November 30th, 2008 at 6:39 pm
Posting as the token clueless idiot, I always interpreted those bags over the meters as meaning it was forbidden to park there at all. In my defense, everybody else attending the play I went to downtown last night apparently felt the same way, as the bagged meters were the only empty spots in a 10-block radius.
Whether business gains or loses from the bags will probably be affected by the percentage of clueless idiots in their target market.
November 30th, 2008 at 6:45 pm
Matt, as a resident of the Harvard Square neighborhood… I’m aware that you hate everyone in New England and around your alma mater, but the parking there truly, truly sucks.
There’s nothing even approaching affordable rates for the high school and college students who come in and provide a big chunk of the business for most of the establishments. Raising the prices so that young people can’t come there isn’t a good idea.
November 30th, 2008 at 6:53 pm
Driving and parking is a function of where you grew up. If you grow up in the suburbs, exurbs, or rural areas, you hate to pay for parking because it is something that has always been free. See the number of people who look for the free parking near the urban, tertiary medical center when they are referred from their suburban physician.
November 30th, 2008 at 6:53 pm
The real public policy solution to this conundrum is to forbid merchants (and employers) from “bundling” the cost of parking into the price of goods. Require parking to be charged for separately.
Since this is usually too radical to be politically acceptable, a more modest but often effective step would be to say that you can offer all the free parking you want, but you can’t limit it to customers – you have to make it available to everyone on the same terms. In practice, in areas where there is transit service, this makes it very hard to offer free parking, since the free parking will be taken up by customers of neighboring stores who choose not to offer free parking. This also has a bonus effect in reducing traffic, since you don’t have to move your car when you go to the store next door.
November 30th, 2008 at 6:54 pm
Just to clarify – the ban on free parking should apply to the malls as well as the downtowns.
November 30th, 2008 at 6:57 pm
Part of the problem with parking meters, at least in the towns I visit in Northern California, is that they are both a congestion tax and an ignorance tax. If you know the options — the streets with free parking four blocks away or the free parking garage near by — you view it as a congestion tax or a luxury tax and game the system as best you can. However, if you rarely visit, you won’t know the options and will be forced to pay. I think it is rational for occasional visitors to feel “unwelcome” in such circumstances.
November 30th, 2008 at 7:45 pm
I don’t know what it is about parking, but it does bring out the irrationality in pretty much all the players. In my little hunk of suburbia, we have two adjoining towns that are pretty similar and, by and large, considered the same community. One downtown has no meters and one has a dizzying array of differently priced meters.
In the meterless downtown, the merchants are constantly complaining about inadequate parking even though it has been documented that those merchants and their employees commandeer a not-insubstantial number of the nearby spaces, even to the extent that a merchants’ lot a couple of blocks from downtown is under utilized.
Meanwhile, in the metered downtown whining about the lack of parking due to the recent construction of a movie/performing arts complex has become a local pastime. Yet, when the town proposed to increase some parking rates to the ungodly level of $1 an hour, people screamed bloody murder.
MY’s correct, for many municipalities, downtown parking is sorta a third rail of local politics.
November 30th, 2008 at 8:06 pm
I think that it’s not the price of parking that deters people, but the hassle of not knowing how long and how they are going to pay for parking. Parking garages usually take credit cards and have a set rate. But meters vary from location to location, and have varying methods of how people should pay.
It’s more likely the deterrent is whether they have enough change and whether they can park for more than 20 minutes without being penalized by a ticket.
November 30th, 2008 at 9:10 pm
Very informative discussion, to which I can add only the observation that my wife made tonight at dinner. To wit, municipal parking rates and parking ticket enforcement are likely to go up, and the latter way up, in the immediate future as towns and cities struggle to raise revenues in the current economic downturn.
November 30th, 2008 at 9:18 pm
This sounds highly implausible. Link please.
No link – it’s my job to know this.
Specifically, to do bumpouts in the small county seat of Waynesburg, PA in 2005 was about $500k/block. The combination of 3+ years of inflation and relocation from small town PA to NYC (higher costs for everything, plus much more sensitive infrastructure) takes care of the rest.
If true, I’ve got to get on the ball with some bids to do them for $900,000 pronto.
I look forward to seeing your business plan for public works contracting in NYC. I’m sure a combination of extensive experience, union relationships, and, frankly, political connections will make you a roaring success.
Building in NYC ain’t cheap – it’s why no one goes there anymore.
November 30th, 2008 at 9:36 pm
Probably part of the equation is not wanting their customers to leave because their meter is running out and they don’t have time to wait in line at the store. They also want people, while they are in a mood to spend, to be able to spend without worrying about other stuff.
November 30th, 2008 at 9:45 pm
Downtown LA has very little free or metered parking. You have to go to either a garage or a lot. They charge “market” rates, the people who have no choice grudgingly accept their fate, the rest of us mostly avoid downtown like the plague unless we can get validation. In other words, to get people to come you have to make parking cheap or free or they go somewhere else.
You seem to want to make downtown LA the default system of parking, so that people have no choice of going “somewhere else”. Of course, a politician suggesting the adoption of this policy would probably end up swinging gracefully from a lamppost.
In general most of your transit posts use different words but convey the same message: “I don’t like people driving, people don’t seem to want to give up driving, lets use government regulation/policy to make driving painful enough to get people to do a lot less of it”
You should just copy and paste that every couple of days or so and save yourself the trouble. You are welcome.
November 30th, 2008 at 10:20 pm
This is the usual infuriating sort of commentary that you get from people whose understanding of the world stops at Econ 101. Supply! Demand! Everyone other than me is an idiot!
Perhaps your buddy Samwick could visit his town manager or interview a merchant or two before announcing to the world that the people who spend their days actually running the town he lives in are too stupid to breathe.
November 30th, 2008 at 10:37 pm
The hard part is finding the right price for parking. That price is somewhere between “free” and “infinity”. Unfortunately, it would be a potentially costly experiment to find that price, both politically and to local merchants, so we fudge it by going with free. When the voices of would-be shoppers complaining of lack of parking start to drown out the voices of desperate merchants complaining of the lack of parking, you will see free parking disappear. Given the competition of malls and such I don’t see that happening soon but maybe some day.
Manhattan is a whole nother story and there should be no free parking there at all. It would alleviate a lot of traffic and pollution.
November 30th, 2008 at 10:44 pm
The reason the town has meters is not to raise money. It is to regulate access, but not in the way that Samwick thinks.
There are two groups who need downtown parking: (i) People with business downtown (including shoppers) and (ii) people who work downtown. The meters are there to keep the workers’ cars in garages and off the streets, so that the people with business have a place to park. The time set is 2 hours to make inconvenient for workers to feed the meter during the workday.
Even though the meters keep spaces open for shoppers, they don’t like them. What they truly hate about meters is not the cost of the parking. It’s the parking tickets. A 2-hour meter means 2 hours of worrying about whether there’s going to be a $30 ticket on the windshield. Ask a mall shopper why she doesn’t shop downtown and half the time the answer is a parking ticket story.
The Christmas parking moratorium is not just a meter moratorium. It’s a ticket moratorium. It gives shoppers peace of mind while they’re browsing the cute little stores. This peace of mind is of very great value to the merchants.
And the brief parking moratorium has no effect on the availability of parking because it’s not long enough to bring the employees’ cars onto the streets. They’ve already paid for their monthly parking sticker and their parking habits won’t be affected by the brief availability of free parking.
See? The laws of economics have not been overturned and the town fathers and mothers are not drooling morons. Mr Samwick, however, is too smart for facts, so he’ll just shake his head knowingly, secure within the walls of his ignorance.
December 1st, 2008 at 1:28 am
No link – it’s my job to know this.
Random guy on the intertubes says “trust me”.
Well, according to this, Cambridge MA spends 20-35 grand per bumpout, or about 10% of your back of the envelope estimate for NY. Road work in New York is probably more expensive than Cambridge, but I’m guessing it’s not 7 to 10 times more expensive.
What I really want to know is how “small town PA” spends 5 times more than the home of frickin’ Harvard on bumpouts.
If it really is your job to know these things you might want to find some support that you could link to that would refute a few minutes of googling by some random web commenter.
December 1st, 2008 at 2:54 am
Whenever Matt runs these threads I keep thinking of the “Free Parking” space in Monopoly, and also about how Americans keep ruining the game by insisting, contrary to the rules, that players earn money by landing on it.
December 1st, 2008 at 3:00 am
What would happen it a town took a purely libertarian approach to parking? For example:
1) You can park wherever you want in a public street, even in the middle of the street, but are liable to get a ticket sometimes for obstructing traffic.
2) Private businesses could offer as much parking as will fit in their plots of land, to anyone they want, and charge as much or as little for it as they want.
3) The government does not build or operatate any parking lots, either free or unfree, except possibly for use by its own employees.
Probably only (1) would be difficult to implement.
December 1st, 2008 at 3:04 am
maybe I’m being naive, but if this is such an issue, why doesnt the store just have an employee feed the meters during the holiday shopping season so people have peace of mind?
sounds like a solution to me…
December 1st, 2008 at 9:28 am
Downtown LA has very little free or metered parking. You have to go to either a garage or a lot. They charge “market” rates, the people who have no choice grudgingly accept their fate, the rest of us mostly avoid downtown like the plague unless we can get validation.
This is true to a certain extent, but as one of those people who works downtown and thus has no choice but to go downtown, I get around the parking prices by not driving downtown. I take the Red Line.
Granted, this option doesn’t work for everybody, but the option does exist and as the rail system expands it’s available to more people over the years.
Whenever Matt runs these threads I keep thinking of the “Free Parking” space in Monopoly, and also about how Americans keep ruining the game by insisting, contrary to the rules, that players earn money by landing on it.
Very true! The game is designed to progress toward a conclusion by limiting the total money supply. Getting money on the Free Parking space instead makes the money supply increase over time, which makes it very difficult to knock players out, and thus makes the game drag on indefinitely. Structural choices have consequences, indeed.
December 1st, 2008 at 9:36 am
geez Matt, when did you become a glibertarian?
December 1st, 2008 at 9:59 am
Ever been to Whistler, British Columbia?
Planned community with all the parking on the outside, walking on the inside.
That would be my ideal, particularly for a place like Harvard Square. (BTW, we always park in the parking garage across from the Charles Hotel on one side, the Garage on the other. It costs, but there’s always room. Otherwise, we take public transportation when we’re in town. Only use the car if we’re there late at night for a show or purchasing and expect to be burdened down with lots of books etc.)
December 1st, 2008 at 6:19 pm
It’s entirely possible that people would respond to a doubling of the price of parking (even if only from $1/hr) by saying “screw that, I’m going elsewhere” and that the offer of free parking really does pull people downtown. They may end up frustrated, but given that they’re already there, do the shopping anyway.
People have a tendency to over-react to behavior which they perceive as gouging or unfair, however irrational that perception may be.
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