Managing Parking with Progressive Pricing

37 Pages Posted: 13 Jan 2022

See all articles by Mehdi Nourinejad

Mehdi Nourinejad

York University; Department of Civil Engineering

David A. Ornelas

York University

Peter Y. Park

York University

Matthew J. Roorda

University of Toronto

Abstract

Parking supply and demand are often imbalanced in urban areas, causing adverse consequences such as excessive search times and long walking distances. Many parking authorities price parking as a demand management strategy by charging either a fixed daily fee or an hourly price for parking. An emerging alternative is progressive pricing, whereby drivers pay an hourly price that increases if their tracked parking duration is longer than a predetermined threshold. This paper investigates the optimal design of progressive pricing for revenue and social welfare maximization when there are two market segments. We study equilibrium properties of progressive pricing and show that its optimal design for revenue maximization segmentizes the demand. In contrast, progressive pricing does not improve social welfare over hourly pricing, because any additional surplus accrued by drivers is offset by the revenue of the parking authority. We develop a micro-simulation model of the City of Toronto's downtown core with parking capability, and show that progressive pricing lowers average parking occupancy and search time in high demand parking clusters by 5.6% and 12.5%, respectively, compared to hourly pricing.

Keywords: parking, payment systems, demand segmentation, progressive pricing

Suggested Citation

Nourinejad, Mehdi and Ornelas, David A. and Park, Peter Y. and Roorda, Matthew J., Managing Parking with Progressive Pricing. Available at SSRN: https://ssrn.com/abstract=4007922 or http://dx.doi.org/10.2139/ssrn.4007922

Mehdi Nourinejad (Contact Author)

York University ( email )

4700 Keele Street
Toronto, Ontario M3J 1P3
Canada

Department of Civil Engineering ( email )

4700 Keele Street
Toronto, Ontario M3J 1P3
Canada

David A. Ornelas

York University ( email )

4700 Keele Street
Toronto, M3J 1P3
Canada

Peter Y. Park

York University ( email )

4700 Keele Street
Toronto, M3J 1P3
Canada

Matthew J. Roorda

University of Toronto ( email )

Toronto, M5S 3G8
Canada

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