The Political Economy of Pricing Car Access to Downtown Commercial Districts

48 Pages Posted: 23 Apr 2015

See all articles by Bruno De Borger

Bruno De Borger

University of Antwerp - Department of Economics

Antonio Russo

ETH Zürich - KOF Swiss Economic Institute

Date Written: November 2015

Abstract

We develop a spatial equilibrium model to study the political economy of pricing downtown parking space when special interest groups (retailers, local residents) lobby the city government. Parking fees penalize downtown retailers, but benefit suburban stores that provide free parking. We show that the government underprices downtown parking if either (i) suburban stores sell at small enough margins compared to traditional downtown retailers, or (ii) some consumers shop both downtown and in the suburbs. Furthermore, we find that local residents may oppose downtown parking fees if exit of retailers produces strong negative externalities (e.g., urban blight). The results are robust to adding alternative travel modes (e.g., public transportation). Our results also contribute to explain the low political support for road pricing.

Keywords: parking, road pricing, lobbying, retailers, superstores

JEL Classification: D720, H230, D430, R410

Suggested Citation

De Borger, Bruno and Russo, Antonio, The Political Economy of Pricing Car Access to Downtown Commercial Districts (November 2015). CESifo Working Paper Series No. 5294, Available at SSRN: https://ssrn.com/abstract=2597980 or http://dx.doi.org/10.2139/ssrn.2597980

Bruno De Borger

University of Antwerp - Department of Economics ( email )

Prinsstraat 13
Antwerp, B-2000
Belgium
+32/3/220.40.31 (Phone)
+32/3/220.47.99 (Fax)

Antonio Russo (Contact Author)

ETH Zürich - KOF Swiss Economic Institute ( email )

Zurich
Switzerland

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