A temporary home for your car

Tuesday, 16 February 2016

by: Qurius

A parking space is a temporary home for your car, but a permanent commitment of land. When unpriced, its costs do not go away; rather they are hidden in the price of everything else. If you live in an urban area, you may think that finding a parking space is difficult, and more often than not, it is.

However, this is only the tip of the iceberg. A parking space has more far-reaching effects on your welfare than you may assume.

Two tales of free parking leading to different endings:

  • Shopping-mall parking may appear to be free, but in fact you pay for it every time you buy something at the mall. Happily, though, what looks like distorted pricing serves the broader interests of society as well as those of the mall owners.
  • Curbside parking in front of your house may also appear to be free, but in fact its costs are already capitalised in housing prices and rents.

So, if you live in a place with free parking, don’t be so sure you’re the lucky one. Research suggests that at least some of the value of that free parking is reflected in your rent or in the market value of your home. So, the issue is not whether you pay, but how you pay – directly or bundled in the cost of housing.

Adapted from an article from the Milken Institute, by Eren Inci, an associate professor of economics at Sabanci University in Istanbul.