Evaluating on-street parking policy

This paper uses a formal model to examine the welfare gains from a marginal increase in the price of on-street parking. The benefits of such a policy are shown to depend on the improvement in search externalities in the on-street parking market itself, plus effects on other distorted urban transport markets, including congested freeway and backroad use, mass-transit and off-street parking. The paper makes two further contributions. The model is sufficiently general that several well-known results from the parking literature emerge as special cases. The model is used to review the existing literature and highlights findings in separate parts of literature. Finally, a numerical simulation model is used to investigate the order of magnitude of an optimal urban parking fee. In particular, these results confirm the importance of taking into accounts effects on other distorted transport markets when deciding upon the level of the price for on-street parking. The model confirms that while parking pricing reform may lead to substantial improvements in parking search times, there is little overall impact on road congestion levels.

When consumers can decide not to pay a tax: enforcing and pricing urban on-street parking space

Governments may be hindered in setting taxes on markets in which the consumer can choose to consume the good but not pay the tax. An example is urban on-street parking. If government attempts to ration demand to supply via a peak-load fee, but fails to invest in costly enforcement, drivers park but do not pay the meter fee. This paper examines optimal enforcement levels and meter fee rates for on-street parking. It is shown that, when enforcement is sufficiently costly, peak-load pricing is not desirable. In addition, some positive amount of illegal parking remains in the optimum. Finally, the model is used to explore the behaviour of local government, when, as was the case in the U.K., it does not receive the revenues from fine payments. It is shown that this might lead local government to set meter fees and enforcement levels that are too low - something that has been widely observed in the U.K.

Regulating urban parking space : the choice between meter fees and time restrictions.

On-street urban parking spaces are typically regulated by either a meter fee or a time restriction. This paper shows that, when the off-street parking market is perfectly competitive, meter fees are more efficient than time restrictions. When on-street parking is free, albeit subject to a time restriction, too many drivers choose to engage in socially wasteful searching for on-street spaces. In contrast, with a meter fee, the relative benefit of parking on-street is reduced, and total search can be minimised. A linear meter fee structure is shown to be optimal. A simple policy prescription is also proposed. Set on-street meter fees equal to off-street parking fees. Finally, a simple numerical model calibrated to central London suggests that the use of optimal meter fees increases parking welfare vy around 5% over an optimal time restriction.

Regulating on-street parking

Consider a shopper or tourist driving downtown and trying to park. Two strategies are usually available: either park at a private off-street facility or search for a cheaper on-street spot. We formalise such a setting and use the model to study optimal government regulation of the on-street parking market. It is shown that the optimal on-street fee equals the marginal cost of off-street supply at the optimal quantity. If the off-street market is supplied under constant returns to scale, this provides a particular simple operational rule: the price on street should match that off street. We also extend the model to consider maximum length of stay restrictions and non-competitive private supply. A numerical model, calibrated to central London, investigates the magnitude of an optimal fee.Parking, Regulating urban transport, Search.

Regulating on-street parking

Consider the choices available to a shopper driving to a city and trying to park downtown. One option, typical to many cities, is to follow the signposts to an off-street parking facility, which is often privately operated. Another option is to search for an on-street spot. If this proves unsuccessful, it is always possible to return to the off-street facility. We formalise such a setting and examine optimal on-street parking policy in the presence of an off-street market. Not surprisingly, the amount of socially-wasteful searching behaviour is shown to depend on the prices of both the off- and on-street market. If the off-street market is run competitively, optimal on-street policy reduces to a simple and attractive rule: set the on-street price equal to the resource cost of off-street parking supply. Other pricing rules result in either excessive searching behaviour or excessive off-street investment costs. Time restrictions - a common alternative to on-street fees - are also shown to be inefficient. In practice, however, off-street markets are unlikely to be competitive. We examine the case of a single off-street supplier playing as a Stackelberg follower to the government regulated on-street market. Based on a numerical example (calibrated to London), optimal on-street policy is shown to either involve setting a relatively high on-street price, such that the monopolist is induced to undercut and gain the entire parking demand, or setting a relatively low price, while the monopolist maximises profit on the residual demand curve. Which strategy is optimal is shown to be parameter dependent.parking; transport pricing; publicly provided goods

Tax reform for dirty intermediate goods: theory and an application to the taxation of freight transport

The purpose of this paper is to study, within a general equilibrium framework, the welfare implications of a balanced-budget tax reform for an externality-generating intermediate input in a second-best economic environment. For purposes of concreteness, the focus is on tax reform for freight road transport to cope with congestion externalities; results for other types of externalities can be derived as special cases. The model takes into account that passenger and freight flows jointly produce congestion, it captures feedback effects in demand, and it allows for existing distortions on all other input and output markets, including the passenger transport market and the labour market. Moreover, it clearly shows that the welfare effects of the reform depend on the instruments used to recycle the tax revenues. A numerical version of the model is calibrated to UK data. The numerical results suggest, among others, that (i) the welfare gain of a given freight tax reform rises with the level of the tax on the market for passenger transport; (ii) the higher the rate of passenger transport taxation, the lower the optimal freight tax; and (iii) compared to lump-sum recycling, both the welfare effects of a tax reform and the optimal tax are substantially higher when revenues are recycled via labour taxes.externalities; transport; taxes; freight; tax reform

Cost-benefit analysis of transport investments in distorted economies.

This paper deals with costs-benefit analysis of investment in transport infrastructure. Its contribution is twofold. Firstly, we develop a general equilibrium model to explore the impact of a small budgetary-neutral investment in transport infrastructure in a second-best setting, where other markets in the economy are distorted by taxes or external costs. The model incorporates different transport modes that are used both for intermediate inputs (freight) and for final consumption (passenger travel). An intuitive operational expression for the net economic benefit of an investment is derived that depends on the way the investment is financed. This expression generalizes recent findings in the literature. Secondly, we illustrate the results numerically using a small example. Our findings show that both the specific financing instrument used and the labour market consequences may have large implications for the net benefits of transport investments. Significant errors may be made in limiting cost-benefit analysis to transport markets only.Cost-benefit analysis; Transport investment; Marginal cost of funds;

Cost-benefit analysis of transport investments in distorted economies

This paper deals with costs-benefit analysis of investment in transport infrastructure. Its contribution is twofold. Firstly, we develop a general equilibrium model to explore the impact of a small budgetary-neutral investment in transport infrastructure in a second-best setting, where other markets in the economy are distorted by taxes or external costs. The model incorporates different transport modes that are used both for intermediate inputs (freight) and for final consumption (passenger travel). An intuitive operational expression for the net economic benefit of an investment is derived that depends on the way the investment is financed. This expression generalizes recent findings in the literature. Secondly, we illustrate the results numerically using a small example. Our findings show that both the specific financing instrument used and the labour market consequences may have large implications for the net benefits of transport investments. Significant errors may be made in limiting cost-benefit analysis to transport markets only.cost-benefit analysis, transport investments, marginal cost of funds..

On green production taxes.

Proposals are often made to tax goods which are environmentally damaging. Many such goods are consumed both directly by households and industry at large: for example, carbon-intensive fuel, waste water or congested road space. This paper adopts a tax-reform setting to evaluate such a policy. The welfare impact is shown to depend on an inputsubstitution effect and an output effect on final consumption, where the latter effect can be conveniently analysed via the standard concept of the marginal welfare cost of a commodity tax. Finally, it is shown that raising a production tax is welfare enhancing if the current tax is below marginal external cost and revenues are recycled via the commodity tax with the highest marginal welfare cost