An Economics Approach to Fixing the Fare of the Parking Lot Service in Bogotá Using Price Cap Regulation

Journal of Cost Analysis and Paramedics, Online, Forthcoming

Posted: 27 Apr 2015

See all articles by Jorge Andres Perdomo Calvo

Jorge Andres Perdomo Calvo

Universidad del País Vasco (UPV/EHU) - Department of Applied Economics III (Econometrics and Statistics)

Date Written: April 15, 2015

Abstract

This article presents an application of the Ramsey Pricing approach to establish the price cap or pricing ceiling per minute for the parking lot service in Bogotá (Colombia), using the microeconomic framework for price fixing from a costs analysis (total fixed costs, total variables costs, average total cost, and marginal cost) of the provision of parking lot service in Bogotá. These results were evidenced by means of a dynamic panel data model for estimating total cost functions through generalized method of moments estimators. Also, from the econometric outcome and using the Ramsey Pricing approach and mathematical optimization (comparative statics), I obtained the maximum fare per minute that should pay the consumers of the parking lot service in Bogotá. I conclude that the current maximum fee per minute, paid by parking users, does not cover the fixed costs incurred by firms that provide legally this service in Bogotá.

Keywords: Ramsey Pricing, price cap, maximum fare per minute, microeconomic framework, parking lot service, Bogotá, total cost of production, dynamic panel data model, comparative statics

JEL Classification: R41, R48, C81

Suggested Citation

Perdomo Calvo, Jorge Andres, An Economics Approach to Fixing the Fare of the Parking Lot Service in Bogotá Using Price Cap Regulation (April 15, 2015). Journal of Cost Analysis and Paramedics, Online, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2599230

Jorge Andres Perdomo Calvo (Contact Author)

Universidad del País Vasco (UPV/EHU) - Department of Applied Economics III (Econometrics and Statistics) ( email )

Avda. Lehendakari Aguirre 83
Bilbao, Vizcaya 48015
Spain

Register to save articles to
your library

Register

Paper statistics

Abstract Views
274
PlumX Metrics