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"The Parking Lot Problem"

By Maria Arbatskaya, Kaushik Mukhopadhaya and Eric Rasmusen

Abstract

If there is queueing for an underpriced good, the queueing can eat up the entire surplus, eliminating the social value of the good. An implication is that there is a discontinuity in social welfare between "enough" and "not enough" for certain goods such as parking spaces. This implies that if there is uncertainty in the number of demanders, the amount of the good should be set well in excess of the mean demand

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