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The Parking Lot Problem

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  • Maria Arbatskaya

    (Emory university)

  • Kaushik Mukhopadhaya
  • Eric Rasmusen

    (Department of Business Economics and Public Policy, Indiana University Kelley School of Business)

Abstract

If there is competition for access to an underpriced good such as a free parking spot, the competition can eat up the entire surplus, eliminating the social value of the good. There is a discontinuity in social welfare between “enough” and “not enough,” with the minimum social welfare being at slightly too small a parking lot because of the rentseeking efforts of drivers. Uncertainty over the number of drivers actually increases social welfare if the parking lot size is set too small; if it is set optimally, the parking lot size will be well in excess of mean demand.

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File URL: http://www.bus.indiana.edu/riharbau/RePEc/iuk/wpaper/bepp2007-04-arbatskaya-mukhopadhaya-rasmusen.pdf
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Bibliographic Info

Paper provided by Indiana University, Kelley School of Business, Department of Business Economics and Public Policy in its series Working Papers with number 2007-04.

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Date of creation: 2007
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Handle: RePEc:iuk:wpaper:2007-04

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Keywords: rent-seeking; all-pay auction; timing; capacity size; queue;

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References

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Cited by:
  1. Hasker, Kevin & Inci, Eren, 2012. "Free Parking for All in Shopping Malls," MPRA Paper 35978, University Library of Munich, Germany.
  2. Michael D. Grubb & Paul Oyer, 2008. "Who Benefits from Tax-Advantaged Employee Benefits?: Evidence from University Parking," NBER Working Papers 14062, National Bureau of Economic Research, Inc.
  3. Martijn B.W. Kobus & Jos N. van Ommeren & Hans R.A. Koster & Piet Rietveld, 2013. "Congestible Goods and Hoarding: A Test based on Students' Use of University Computers," Tinbergen Institute Discussion Papers 13-083/VIII, Tinbergen Institute.

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