Monday, November 4, 2013

Parking Prices in Seattle

Here is a nice article on how the city of Seattle can use prices to more efficiently allocate parking spaces.  In essence, Seattle moved from uniform pricing of parking spaces to price discrimination (group pricing) as a way of improving the allocation of parking spaces.  Admittedly, this is not as refined as San Francisco, it is also not as expensive.

One thing to keep in mind for the future is that the group pricing model shows that with constant marginal costs (seems fairly reasonable in this case) and charging different group (here neighborhoods) different prices will lead to more revenue than by charging uniform prices.  Thus if the parking authority in Seattle can keep some of the additional revenue, they can re-invest these resources to improve the parking price strategy to both improve allocative efficiency and the parking authorities bottom line.

I have blogged about parking prices before in San Francisco (using a demand and supply model) and Chicago (using a monopolist model).

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