Parking is a private good

Tuesday, 10 May 2016

by: Qurius

In an economic sense a parking space is a private good, just like a rented house; if someone parks a vehicle there nobody else can use that spot.

The development of parking can easily be compared with the use of agricultural land in the Middle Ages. At that time, many places had a so-called common. All farmers were allowed to let their livestock graze on those pieces of land. There was enough space, so if there was more demand for this land, then the common was simply expanded. But at some point in time, the space became scarce and there was more demand for using the common land than there was space available, so rivalry emerged. Thus it became a common-pool good and with that, the quality of the good also declined. In order to deal with this, use was reserved for a certain group of farmers and thus it became a club good, but in due time it became a private good.

The same is true of parking. Initially, there was plenty of space and there were only a few cars, so parking (often indoors, because the cars at that time were not very well protected against rain and wind) took place in public space. As the number of cars increased, rivalry for use of the available parking space at some locations came about and the quality thus declined. This initiated two developments.

  • Either a permit system was introduced whereby it became a club good, or
  • the parking space became a private good.

Martens and Schneijderberg argue that all four types of parking come about in practice. Parking is a public good in residential areas with ample parking space. However, at many places, especially in densely built-up areas, there is a shortage of parking space. This is when it becomes a common-pool good. This has resulted in parking becoming regulated, often in the form of parking spaces being reserved for permit-holders. Hence parking space has become a club good.

Parking at businesses – and at some residences – is often on private property and thus becomes a private good. The same happens when paid parking is established, where the user in fact pays a certain rate to rent the parking space for a while.

Extract from Eleven truths about parking, mobility and retail (Dutch article)