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.

  1. 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.

  2. 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.