The Free Rider Problem and Parking Minimums


Dodger Stadium and parking infrastructure in Los Angeles -Google Maps

The discussion of parking minimums in Eric de Place’s Law and Order and Parking Lots leaves out the essential reason parking minimums exist. It is not “a mystery” but a response to the free rider problem. Free rider problems arise when a good is used but not paid for (or underpaid for) and leads to overconsumption/underproduction of that good. Since businesses require a large amount of parking in nearly all North American cities, residents, in particular, are concerned that open parking spots would become hard to find if they had to compete with business patrons parking in front of their homes and apartments . This is why striking parking minimums from municipal codes isn’t as easy or consequence-free as de Place makes it out to be.

An alternative which already exists in many urban neighborhoods is to permit parking along residential streets threatened by business parking demand while reducing or eliminating parking minimums on establishments. This would put the decision of whether and how much parking to provide into the hands of the people who are able to make the most efficient decision. Municipalities could also determine the most efficient allocation of parking but the research required would break the budgets of most planning departments and, besides, there is an intuitive/non-analytic knowledge of parking demand available to business operators that isn’t available to transportation and land use planners. Let business owners pay for the parking they think they need or encourage them to form parking unions to centralize parking and benefit from economies of scale.

The problem with this scheme — restricting parking on residential streets and letting business owners build to their needs — will result in more land being turned over to parking and we already have way too much of that: 5 to 11 spots for every car depending on the study. We must also address the overproduction of parking on residential streets. Donald Shoup, a professor of planning at UCLA and the authority on parking in America, estimates that an 85% occupancy rate block-by-block is the most efficient load to place on street parking. Pricing programs should be managed to achieve this rate. At this level, the search for parking, which accounts for a staggering proportion of downtown traffic, is nearly eliminated as one or two spots is always free on each side of a city block. Residential neighborhoods present a challenge for the application of the 85% rule because parking demand is very low during the day when people leave their homes and very high at night when people return to them. Not coincidentally, this is the opposite pattern of parking demand for businesses.

The solution, it seems, is either a complication of the permitting structure to allow business patrons to make use of morning and afternoon residential spots, or some kind of technological program which intelligently directs parking demand to parking supply. The former takes education at a local level and the latter takes investment at the national level. Both cost time and money but only one option is effectively available to local governments. Striking parking minimums from municipal codes without any mitigation of the consequences, on the other hand, will result in nothing short of parking chaos.


2 thoughts on “The Free Rider Problem and Parking Minimums

  1. My first question, and what I was getting at in my post below, is why do residents necessarily have priority for parking spaces on residential streets? Aren’t they public spaces too?

    Also just an interesting example of parking union is near the West Seattle Junction. The Business Association got together to subsidize two major parking lots just off the main strip so shoppers don’t pay at all. I wonder how long this will be a strategic financial choice but I think its a viable choice for businesses if they truly think that parking is too difficult.

  2. Legally, they really don’t have a right; it’s public land. And I think we should be moving towards sending honest price signals about residential street parking the way we are beginning to with commercial street parking, but I worry it would be a significant and unexpected burden to change, if not the letter of the rules then, the spirit.

    If you telegraph the pricing, say, by ramping up property taxes over 10 years to reflect the public investment in the ROW outside your house with provisions for people on fixed incomes, I think that could work. It could work politically and it could work efficiently — balancing the speed of sending price signals with minimizing outrage.

    In the future, I think we’ll be forced to make a decision about the relative merits of assigned residential parking versus first come, first serve residential parking. This is what goes on in movie theaters in the US versus many European movie theaters. In the US, it’s a free for all; in Europe, you get an assigned seat with your ticket. What that means is we spend more time (e.g., waiting in line, finding a seat) for more seating choice. It makes me wonder how places like Manhattan and inner London deal with residential street parking.

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