The Impact of Congestion Pricing and Parking Taxes on Spatial Competition

Policymakers seeking to reduce reliance on single-occupant automobiles are giving serious consideration to methods to price roads during periods of congest ion and to increase the cost of parking. Such policies are intended to induce increases in carpooling and in the use of mass transit; however, they may have unintended consequences that counteract these goals in the long run. In particular, actual implementation of such policies may create differential price increases that affect the spatial competition for markets between firms located in the central city and those in the suburbs. Analyzing such policies using the spatial competition models of location theory reveals that they may create incentives/or long-run changes in location that subvert the mode choice impact of the policies. Careful evaluation of alternatives, such as cashing out employer-provided parking, may allow for development of policies that achieve the desired mode-choice effects without generating adverse spatial competition effects