The Political Economy of Pricing Car Access to Downtown Commercial Districts
48 Pages Posted: 23 Apr 2015
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
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