The High Cost of Free Parking

Monday, January 16th, 2006

In The High Cost of Free Parking, Donald Shoup argues that city planners forced an oversupply of parking — and have thus subsidized automobiles:

Although urban planners have not ignored the commons problem created by free curb parking, they have misdiagnosed it. Planners have identified the source of the problem not as the city’s failure to charge market prices for curb parking, but as the market’s failure to supply enough offstreet parking. Cities therefore require ample on-site parking for all new buildings. The logic behind this policy is simple: development may increase the demand for parking, but cities can require developers to provide enough on-site spaces to satisfy this new demand. If a new building increases the demand for parking by 100 spaces, for example, cities can require it to provide 100 new spaces so that competition for the scarce curb parking doesn’t increase. Curb parking remains a commons, and cities require enough off-street parking to satisfy the increased demand.

A major flaw in this solution, however, is the way planners estimate demand: they do not estimate it as a function of price. Instead, they make the unstated (perhaps even unconscious) assumption that all parking is free. They estimate the demand for free parking and then require enough spaces to meet this demand. In effect, urban planners treat free parking as an entitlement, and they consider the resulting demand for free parking a “need” that must be met. Off-street parking requirements create an abundance of parking spaces, driving the market price of parking to zero, which explains why drivers can park free for 99 percent of their trips. Offstreet parking requirements are a fertility drug for cars.

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