Parking That’s Just Right

The Goldilocks principle of curb parking prices

Issue 11 | August 2023

The right price for curb parking is the lowest price a city can charge while still leaving one or two open spaces on each block. If no spaces are vacant, the price is too low. If many spaces are vacant, the price is too high. If one or two spaces are vacant, drivers can always find an open spot at their destinations and the price is right. With this Goldilocks pricing policy, curb parking is both well-used (most spaces are occupied) and readily available (a few are vacant). 

Goldilocks pricing for curb parking benefits cities in three ways. 

First, because drivers won’t have to circle the block to find an open space, the right prices for curb parking will reduce traffic congestion, air pollution, and carbon emissions. 

Second, by encouraging turnover, the right prices for curb parking will benefit the economy. Drivers will park, buy something, dine somewhere, or visit someplace and then leave, freeing up spaces for other people to do the same. 

Third, the right prices for curb parking will help reform land use. Because open curb spaces will be available everywhere, cities can remove off-street parking requirements that increase the cost of everything except parking. 

Goldilocks parking prices are not a new idea. In 1954, William Vickrey, who would later win the Nobel Prize for Economics, proposed that cities should set the prices for curb parking to “keep the amount of parking down sufficiently so that there will almost always be space available for those willing to pay the fee.” 

Demand-priced curb parking sounded outlandish and impractical when Vickrey recommended them in the 1950s, but new technologies make it sensible and practical now. Several cities, including Boston, Los Angeles, San Francisco, and Washington, D.C., have adopted this policy. But if cities charge market prices for curb parking, how will drivers decide where to park? 

Charging market prices for curb parking will produce a cascade of benefits throughout the city, the economy, and the environment.

Decisions based on space, time, and money

Where curb prices are based on demand, parking is more expensive near popular destinations and cheaper farther away. You can spend more money to park closer to your destination, or you can spend more time walking from a spot farther away. The optimal parking spot minimizes the sum of the driver’s money cost of parking and time cost of walking.

The value of saving time spent walking varies by trip and person. If you have plenty of time, you may park free a mile away. If you’re in a hurry, you may pay a high price to park right at your destination. 

The value of saving time spent walking depends on the quality of the walk. At its best, walking is useful, safe, interesting, and enjoyable. In a walkable neighborhood, drivers can walk farther to save money and enjoy the stroll. Where the streets and sidewalks are dark, dirty, and unsafe, drivers will pay more to park closer to their destinations.

Market prices for curb parking serve as a buffer allowing late-arriving drivers to buy time when they need it most. Drivers who arrive late can spend more money to park closer to their destination and reduce walking time. Drivers who arrive early can park farther away and save money by spending more time walking. The option of paying more money to save time is a valuable form of travel insurance. 

All models are wrong but some are useful

A market-based model cannot predict where all drivers will park, how long they will stay, or how much they will pay, but it is helpful in thinking about public policy.

A model of curb parking choice should include at least four variables: the price of parking at the meter, the number of people in the car, the length of time they want to park, and how fast they walk. 

Drivers who buy time in the parking market will sort themselves out according to how long they want to stay, how many people are in the car, how fast they walk, how they value time, and many other factors that differ from one trip to another and that only individual drivers can know. Are they carrying heavy packages? Is it raining? To paraphrase Pascal, parking has reasons that reason will never know.

If parking prices increase as drivers approach their destinations, carpools, short-term parkers, slow walkers, and drivers with a high value of saving time will park closer to their destinations. Solo drivers, long-term parkers, fast walkers, and drivers with a low value of saving time will park farther away. This spontaneous, self-organizing pattern of parking will reduce the overall cost of time spent walking between parking spaces and destinations. The best individual choices will lead to a good collective outcome. If cities charge Goldilocks prices for curb parking, drivers will do the rest of the planning.

The length of time a driver parks for will vary much more than the other three variables. A high price per hour is not much of a problem if you park for a short time but it’s a big problem if you park for a long time. The number of people in the car and their walking speed will vary much less. For this reason, parking duration is the most important variable to consider when estimating how far drivers will walk to their final destinations.

The closer and more expensive spaces will turn over faster than the more distant and cheaper spaces. Convenient spaces will be available for quick trips and thus will increase the number of customers for local businesses. 

To create a few open curb spaces everywhere, parking prices must vary by time and location. The peak prices might occur in commercial districts during weekdays and near entertainment venues during the evenings. As demand varies, parking prices at each location will rise or fall, and the local peaks will shift around like kittens fighting under a blanket. Popular places will have higher parking prices, but no one will have to search for parking like panning for gold.

Without any further action, demand-based prices for curb parking will make it hard for low-income residents to park in the highest-demand places. To mitigate this effect and ensure equity, cities can give low-income residents a discount on curb parking, just as they give discounts on electricity and water bills. High-income drivers will pay the market price for curb parking, and low-income drivers will get a subsidy. But if cities subsidize parking for low-income car owners, they should offer an equivalent subsidy (such as free transit passes) for other low-income residents who do not own a car. Subsidies should be for people, not just for drivers.

Demand-based prices for loading zones

Man riding a UPS quad ebike in Manhattan

Source: UPS

Because demand-based prices will reveal the market value of the curb lane, cities can compare the value of curb parking to the value of other uses, such as loading zones, bus lanes, bike lanes, wider sidewalks, or outdoor dining. Charging market prices for the curb lane will help city planners find the best uses for the land.

New technology has made it easier for cities to monitor, price, and enforce curb uses. For example, camera technology now allows cities to charge for parking in loading zones according to the length of delivery vehicles and their duration of parking. If delivery vehicles pay for parking in proportion to their length, a 50-foot truck would pay five times more per minute parked than a 10-foot cargo bike. With this pricing, electric cargo bikes could become the most cost-effective delivery vehicles for short trips with small packages, and this shift would reduce greenhouse gas emissions per delivery.

Cities can monitor the revenue per curb foot to identify underperforming uses and rebalance the curb space among uses to increase productivity and revenue. Delivery vehicles paying a high price per minute for short parking sessions can yield higher revenue than a few cars paying a low price per hour for long sessions. Metering curb parking with license-plate cameras will also provide valuable information about who uses the curb, when they use it, and how they use it. The resulting data will enable cities to manage the curb more efficiently, such as by resizing the loading zones.

Pricing the curb to guarantee a few open spaces will also reduce illegal parking, such as double parking and parking at bus stops or at fire hydrants. Most illegal parking occurs because all the legal spaces are full. A study in New York City found that creating even a small number of legal vacancies at the curb reduced illegal parking by 50%. The best way to reduce illegal parking is to ensure that there are enough legal spaces available. A study of Seattle’s commercial loading zones found that 40% of commercial vehicles double-parked or parked in transit lanes, bike lanes, tow-away zones, and other no-parking zones. The right prices for curb parking will make legal loading spaces available everywhere.

Demand-based prices for curb parking can also show where the city might shift a curb parking lane to a bike or bus lane. If the price of parking is low, bike and bus lanes will cost little in lost meter revenue compared to the time and money savings of safer bike rides and faster, more reliable bus service.

Is this practical?

Charging the right prices for curb parking is efficient in theory and workable in practice. Planners won’t get the prices right all the time, but with experience, they will probably get close enough most of the time.

Many drivers already pay for parking with mobile apps, and some newer cars come equipped with these apps in their dashboards. If cars automatically stop paying for parking when they leave the curb, drivers will pay only for the time they use it. If the price and availability of parking spaces are available online, drivers may be able to tell their guidance systems their parking preferences about saving time and money. The technology can interpret confusing regulations and give turn-by-turn directions to the nearest available spaces that meet that traveler’s preferences. Artificial intelligence can make better-informed parking decisions than humans can, and parking-optimizing guidance systems will likely be available long before self-driving cars.

The time lost in searching for parking is a truly nonrenewable resource. Right-priced curb parking will convert the time and money formerly spent cruising into revenue for public services. And if on-street spaces are always available, cities will not have to require off-street parking, thus freeing land for more valuable uses. When all these benefits are considered, market-priced parking is much cheaper than free parking.

Underpriced curb spaces lead to curb parking shortages, which lead to demands for off-street parking requirements, which spread the city apart to make room for parked cars, which makes cars more necessary because the city sprawls.

What happens at the curb doesn’t stay at the curb

Market-priced curb parking will allow drivers to choose the best parking space for each trip. In contrast, free curb parking forces drivers to compete for scarce spaces by spending time cruising. The lack of an open curb space may seem trivial, but the long chain of emergent consequences — cruising, traffic congestion, air pollution, carbon emissions, and restrictive zoning — exemplifies the butterfly effect. As UCLA’s legendary basketball coach John Wooden said, “Little things make big things happen.”

Underpriced curb spaces lead to curb parking shortages, which lead to demands for off-street parking requirements, which spread the city apart to make room for parked cars, which makes cars more necessary because the city sprawls. The more parking cities require, the greater the need for cars, requiring still more parking — a vicious cycle. More cars mean more traffic, which makes walking and biking less pleasant, and congestion slows public transit. Furthermore, all of this driving pollutes the air and accelerates global warming. Few people will connect any of this disaster to mismanaged curb parking, but failing to charge fair market prices for curb parking has disastrous downstream consequences.

By the same reasoning, charging market prices for curb parking will produce a cascade of benefits throughout the city, the economy, and the environment. Open curb spaces will eliminate cruising, increase the reliability of travel times, and reduce the demand for off-street parking requirements. Removing parking requirements will reduce the cost of everything except parking. Land previously reserved for storing cars will benefit many more people when converted to housing and other uses. Infill development on former parking lots will make housing more affordable and the city more walkable.

If curb parking is underpriced and overcrowded, cruising for a scarce open space is individually rational but collectively insane. Cruising for underpriced parking is not one of Adam Smith’s cases where individuals pursuing their self-interests are led “as if by an invisible hand” to produce the greatest good for the greatest number. But if curb parking is priced right, it will be used well. Goldilocks prices for curb parking will give Adam Smith’s invisible hand a green thumb, and rational individual choices will add up to collectively sane results. Open curb spaces can do more than make cities convenient for cars. They can also make cities better for people.