The economics of parking provision for the morning commute

In this paper, we study the economics of parking provision for the morning commute, where all the parking lots are owned and operated by private operators. The parking capacity allocations, parking fees and access times are considered in a parking market. First we solve the parking market equilibrium without regulatory intervention, revealing four types of competitive equilibrium. Only one of the four types of equilibrium, however, is found to be stable and realistic, and under it each parking area is preferred by the commuters during certain time periods. Compared to the case without parking choice, provision of parking through a competitive market is able to reduce commuters' travel cost and queuing delay, but it does not necessarily lead to the most desirable market outcome that minimizes social cost or commuter cost. This issue can be addressed through market regulations, such as price-ceiling, capacity-floor or capacity-ceiling, and a quantity tax/subsidy regulation. It is found that both price-ceiling and quantity tax/subsidy regulations can efficiently reduce both the system cost and commuter cost under certain conditions, and help ensure the stability of the parking market. Numerical examples are also provided to illustrate these findings and furthermore, how a price ceiling or a quantity tax/subsidy should be set in a parking market under realistic model parameters.