Parking-nomics
My old pal Roadguy wrote recently about a curious parking-garage pricing structure in Minneapolis:
“$2 for the first 20 minutes, a whopping $12 for the next 20 minutes, then $2 for every 20 minutes after that, with a daily maximum of $23. But if you’re in before 9 a.m. and you leave after noon, you pay eight bucks.”
Parking pricing, which in New York City can seem capricious and non-transparent, deserves its own chapter in economics textbooks — is there anything comparable? (OK, I suppose there’s plenty of things, daily versus weekly rates at hotels, for example). My bet here is that given that it’s across from a court house, the garage receives a lot of people coming in for short visits (renew licenses, etc.). Those people are in a hurry and probably not in the mood to shop around. You can further imagine that, under normal bureaucratic conditions, there’s no way you’re getting in and out from your car and back in less than 20 minutes. So you hit that ‘sweet’ spot of the next 20 minutes (perhaps the garage has ascertained the average visit is around an hour). To stop short of outright highway robbery they probably ease off after that, but the damage has been done. Perhaps the people who arrive before 9 a.m. and leave after noon are the daily commuters, and perhaps they wouldn’t use the garage if they had to pay the short-term rates. Any other thoughts?
There’s an interesting discussion of parking pricing structures over at Marginal Revolution. I like the Occam’s razor approach that one poster suggests: “Isn’t there a much easier explanation–third-degree price discrimination? People who want to park for short period have inelastic demand and as a result they end up paying higher price.”
This entry was posted on Thursday, November 6th, 2008 at 4:28 pm and is filed under Parking, Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.
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