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Incidentally, the gasoline metaphor does not really work.

Producing and delivering more gasoline is very easy. And, the value of gasoline is only very slightly correlated with where you buy it. FYou can use gas at a place other than where you purchase it.

Parking, on the other hand, is extremely difficult to produce in a city like DC with high real estate values, onerous historic preservation legislation, and tight zoning; loses value if it is produced in too great an abundance (e.g., parking is more valuable if it is front of one's house in a neighborhood that does not have huge parking lots); and is most desirable when used near where it is consumed, in the sense that "consumption" takes place where the owner of the parked car is while the car is parked.

Perhaps a better metaphor would be that of the hardware store during the unexpected blizzard. Imagine that a hardware store has twenty snow shovels and cannot get more delivered because of the snow. The hardware store has several options:

- Auction them
- Raffle them (the winner is entitled to buy at the non-blizzard price)
- Some kind of rental arrangement.

The advantage of the auction is that the price that somebody is willing to pay for the shovel is a good (though imperfect) proxy for how much that person values the snow shovel. In a raffle scenario, somebody who desperately needed the snow shovel (needs to dig grandma out from her accessory dwelling, etc.) is denied the snow shovel by random chance and the person who just wanted to keep their shoes dry gets the shovel.

How does this apply to parking? Right now, we have a de facto raffle system. It's kind of dumb luck and random chance if you get a parking spot since there are more cars competing for spaces than there are spaces. If we moved to an auction model (or one that is a bit more price discriminatory --in the economic not racial sense, thank you very much) as you suggest, we could ensure that those who want spaces the most get them, raise revenue for the city, and disincent those who do not need cars but are happy to have them as long as the city subsidizes their parking spaces.

The most compelling argument against the auction model is that auction markets are not efficient and that wealthy people with low need can out-bid poor people with high need. This does need to addressed. I would suggest a logarithmic means testing approach. A lower bid from a poorer person counts the same as a higher bid from a higher person but the indifference curve between bids is not linear as bids go up; instead, the incremental dollar bid by the wealthier person should have steadily more and more weight.

P.H.

by Paxton Helms on Dec 10, 2012 11:06 am • linkreport

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