Writers at Salon, Slate, and Time have criticized new San Francisco-based apps that allow users to purchase access to a parking spot as another driver is leaving it. The apps MonkeyParking, Sweetch, and ParkModo provide a platform for drivers to let others know when they’re leaving a spot, and reserve the spot until the another user bidding on the spot arrives to pull in. As of last week, the future of these apps is unknown since San Francisco issued a cease and desist order based on the city’s rule against auctioning or leasing public parking spots. All three writers express outrage that the apps’ creators and users are profiting off of government-owned parking spots. At Salon, Andrew Leonard writes:
Monkey Parking’s solution intended to generate profit off of a public good by rewarding those who are able to pay — and shutting out the less affluent.
One problem with this line of reasoning is that parking is clearly not a public good. It is both perfectly rivalrous and easily excludable. Unlike a public good, the price system provides the right incentives for suppliers to provide the optimal amount of parking based on consumers’ willingness to pay. While Leonard uses the term public good, he may mean simply a good that the government provides, and he argues that entrepreneurs should not be permitted to profit from these public services. While this argument provokes a populist sense of unfairness, Monkey Parking should be evaluated against the current problem of under-priced curb parking rather than against the assumption that city governments are currently pricing curb pricing appropriately.
City governments systematically undercharge for street parking, especially in cities like San Francisco where land is very valuable. These apps are able to profit because the city charges prices for parking below the level that drivers are willing to pay. Without an app that lets drivers pay for the knowledge of parking spot availability, parking spots are allocated by drivers’ time spent driving around and looking for a spot.
Curbside parking spots, typically the most conveniently located and most accessible spots on a block, are often priced lower than nearby garage spots. Because these spots are desirable, they are often full. Drivers circle their destinations looking for available curb spots, paying for the cost of the spot with their time and wasted gas rather than in dollars as they likely would in a free market. Donald Shoup, the expert on all things parking, estimates that 30% of downtown urban traffic congestion is caused by drivers who are cruising for parking. In just one Los Angeles neighborhood, Shoup estimates that drivers waste 47,000 gallons of gas, or 730 tons of carbon annually just looking for parking spots. The cost of the cruising phenomenon in terms of drivers’ time and in greenhouse gases across cities and around the world is clearly immense.
Slate’s Will Oremus argues that allocating parking spaces based on drivers’ willingness to pay for them is regressive:
As if it weren’t enough that middle-class San Franciscans are getting squeezed out of their housing, now they get to worry about some tech tycoon outbidding them for their parking spot. These are public, metered parking spaces, mind you, paid for by taxpayers.
Keeping the price of parking below the market-clearing price is not clearly beneficial to low- or middle-income people as these authors assert. If a low-income person is running late for an important appointment or has a heavy load to carry to his destination, he will likely be thankful for the opportunity to pay a premium for a conveniently located, available spot. The app allows people to trade money for time and convenience, and people of all income levels may or may not want to make this tradeoff in a given situation. Under-priced curbside parking is a subsidy to all drivers, regardless of their income. In San Francisco, low-income residents are less likely to have access to cars than high-income residents, so providing under-priced parking likely subsidizes high-income residents more than low-income residents.
Rather than prohibiting these parking apps, San Francisco policymakers have the opportunity to make them irrelevant. Their program SFPark is already implementing reforms based on Shoup’s recommendations. 8,200 of the city’s curbside parking spots have sensors that indicate whether or not they are occupied. These sensors provide data on when parking spots are occupied, and the meters for these spots are set with the goal of maintaining 15% availability to eliminate cruising. The prices are capped at $6 per hour, so they may not reach levels high enough to maintain 15% availability, creating an opportunity for MonkeyParking to allocate spaces based on price.
By expanding SFPark to more of the city’s curbside spots and allowing parking prices to go as high as necessary to maintain 15% availability, San Francisco policymakers would capture the parking apps’ potential revenues for the city. For those concerned that charging market-clearing prices for parking hurts low-income residents, this new revenue source could be used to provide a tax credit for low-income people. However, it’s unclear to me why the price of parking should be artificially low to benefit low-income people as opposed to all other goods. Allocating parking based on pricing rather than by queuing allows people to plan their travel based on the true cost of their trip. Setting parking prices at a market-clearing rate would create an incentive for people of all income levels to consider taking transit, biking, or walking to their destination, and would allow anyone to have the availability of conveniently located parking spots at their destination when the it’s worth the price to them.