Time for a little demand management! NPR‘s Planet Money reports that the City by the Bay is entering a brave new world of variable pricing for on-street parking (San Francisco Spends $25 Million To Test ‘Goldilocks’ Parking, Jul 27). The plan is one part technology overkill and one part introductory microeconomics.
“It’s the ‘Goldilocks’ principle of parking spaces,” said Donald Shoup, a professor of urban planning at UCLA who wrote a book called “The High Cost of Free Parking.”
Shoup’s work was the inspiration for a high-tech project San Francisco is launching today. Its aim: to set parking prices just right.
The system will use electronic sensors to measure real-time demand for parking spaces, and adjust prices accordingly. When there are lots of empty spaces, it will be cheap to park. When spaces are hard to find, rates will be higher.
These are not small swings in price either. Parking will start at 25¢ per hour but jump to $6 per hour — 24 times higher — when spots are scarce. In the long run, drivers will be guided to open spots by electronic signs and smart phone apps.
I spent a decent amount of time in grad school circling San Francisco blocks looking for on-street parking so I can see the promise in this system. Most major cities under-price on-street parking relative to available lots and raising parking rates always seem politically contentious. Evanston has raised its downtown rates and extended the hours over which drivers have to pay several times in the last decade. There is inevitably griping that this will kill downtown businesses. However, rates top out at less than a buck and hour and it’s impossible to find on-street parking on a Friday night. Variable pricing seems a way around some of the political blow back. You can have high prices on Friday night but effectively subsidize those who come down on Tuesday evening.
There are, of course, some questions. First, do parking violation fines go up with the rate? It seems like they should. Suppose the cost of a ticket is a flat $30 independent of the prevailing meter rate. I would happily pay 50¢ for two hours of parking to avoid even a small chance of getting nailed with a ticket. On the other hand, shelling out $12 is a different story. If I have only a 25% chance of a ticket, I should not pay. Of course, the other part of this equation is enforcement. The city can get me to pay up by bolstering enforcement when rates are high. That may be easy enough to do. Rates presumably peak at predictable times making it easy to schedule enforcement staff. (The article is mum on whether your meter narcs on you when you over stay your welcome.)
I also wonder how quickly they adjust prices. I would expect them to be fairly sticky during peak times. Having three simultaneously open spots on a busy block might generally seem like a small miracle but it is going to happen at some point. I suspect that the price doesn’t immediately fall unless all three slots stay open for some time.
There do seem to be some downsides. People don’t like uncertainty and introducing variability into the cost of parking — even if it just ranges from 4 to 10 bucks — will annoy some. There are also equity issues. Do I get a cheaper rate despite the fact that we were parking at the same time simply because I got to the meter first? Finally, there is the cost of implementation. A number of the comments on NPR’s site are vehemently negative, labeling the proposal an expensive boondoggle. I think that the challenge there is that it is a little hard to clearly articulate for the general public what the objective is. It doesn’t seem to be straight up profit maximization. If it were, prices wouldn’t top out at six bucks. Rather, the city seems to be balancing the desire to allocate a limited resource while encouraging some turnover in parking spots to please local businesses. Having higher rates at peak times will do that with or without the advance technology.