The Economics of Parking: Essays on Regulation, Competition and Information Frictions

Parking policy has attracted considerable research interest in the past, but it is currently a hotly debated topic given the market-oriented turn taken by the sector and the complexities of the market’s intrinsic distortions. The empirical literature tends to focus on curbside parking and generally considers garage parking simply as an outside option. However, garage parking is just as relevant as curbside parking, to the extent that the vast majority of parking spaces in European cities are provided by off-street parking garage facilities. Indeed, none of the previous studies take into account the impact of curbside parking regulation instruments on garage demand and private operators’ price setting behavior; neither do they analyze the potential contribution of public garage provision to correct market distortions (as a means to counterbalance private garage localized market power), nor take into account potential information frictions that translate into market outcomes that deviate from perfect competition scenario. Thus, Chapter 2 analyzes the impact of garage fee and curbside regulation characteristics (fee and type of dedicated spaces) on garage parking demand (for both occasional parkers and subscribers). It presents an empirical estimation of garage demand elasticity to the garages’ own fee and curbside fee cross-elasticity, which suggests that both goods are not perfect substitutes and curbside parking is preferred. As such, it identifies a relevant pricing distortion in the case of Barcelona. The chapter also provides evidence that the characteristics of curbside space regulation (commercial, mixed or resident-exclusive) has an impact on demand, but not always the one initially intended. Based on these results, we suggest policy interventions to address the pricing distortion and stress the need for an integrated market policy approach. Chapter 3 explores the determinants of private garage prices, focusing specifically on cost shifters and the interaction between curbside regulation and garage price-setting decisions, while also analyzing the role of market structure. It shows that the main price drivers are provision costs and quality shifters (land value, capacity, number of opening hours and type of payment). It suggests a negative relation between garage fee and curbside fee, capturing just how inefficiently the curb is used (cruising) and so giving garage operators the opportunity to further exert their market power. The chapter also challenges the assumption that more competition drives prices down, and shows that current public garage provision does not affect them. It shows that only the dominant position of private operators in the relevant market is positively related to garage prices. Additionally, our findings also confirm the possible theoretical link between parking and retail prices. Given these outcomes, the chapter examines potential policy interventions to address parking market distortions. Chapter 4 provides compelling evidence of the existence, and of the degree, of information frictions in the garage market. It also empirically tests whether parkers’ lack of knowledge affects the level of prices they end up paying, suggesting that information frictions do translate into undesired market outcomes. It shows that information frictions are so pervasive that active search during a given trip does not help drivers reduce the fees they pay and only passive information acquisition through experience seems to help them. The chapter also suggests that garage operators might engage in price obfuscation, which allows them to exploit the consumers’ lack of knowledge. Addressing existing information frictions therefore is a relevant policy issue if parking market efficiency is to be achieved and we make some recommendations regarding policy interventions that might be useful in this regard. Chapter 5 outlines the general conclusions that can be drawn from the thesis and identifies the policy implications derived from the study. The chapter stresses how the curbside premium represents an important price distortion in Barcelona’s parking market and highlights the roles that the private sector and information friction play in this. We specifically stress the need to change current curbside and publicly provided garage parking pricing schemes and the added need of taking the private sector into account in an integrated parking market approach. In this chapter, we also identify the need to address the issue of imperfect information and practices of price obfuscation if market efficiency is to be achieved. Here, we propose a number of policy interventions that exploit the leading role played by the public sector in Barcelona’s parking market and explore potential initiatives for public-private collaboration. Although our recommendations focus on the specific case of Barcelona, they may very well apply to other cities that face parking market distortions. Finally, based on the we identify further lines of research.La gestió de l'aparcament ha rebut una considerable atenció a nivell de recerca i és actualment un tema candent degut a les noves iniciatives de tarifació dinàmica i les complexitats intrínseques que suposen les distorsions en el mercat de l'aparcament. La literatura empírica s'ha enfocat majoritàriament cap a la gestió de l'aparcament en calçada, tot i que els garatges són generalment els que ofereixen la major part de l'oferta d'aparcament en ciutats europees i d'EEUU. Aquesta tesi s'analitza quin és l'impacte de la regulació de l'aparcament en calçada sobre la demanda als garatges, detectant quin grau de substitució hi ha entre ambdós i proposant una mesura de la distorsió de preu existent (que no permet assolir l'eficiència en el mercat); així com els factors que determinen la fixació de preus dels operadors privats, el paper de la competència i la provisió pública de garatges sobre els mateixos. A més, també s'aporta una primera evidència d'informació imperfecta en aquest mercat; distorsió que agreuja l'externalitat de cerca d'aparcament en calçada i el poder de mercat localitzat dels garatges. A partir de les evidències trobades es proposen un seguit d'actuacions i modificacions de la regulació de l'aparcament per assolir la seva eficiència econòmica en aquest mercat