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The Parking Lot Problem

Author

Listed:
  • 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.

Suggested Citation

  • Maria Arbatskaya & Kaushik Mukhopadhaya & Eric Rasmusen, 2007. "The Parking Lot Problem," Working Papers 2007-04, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
  • Handle: RePEc:iuk:wpaper:2007-04
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    File URL: http://kelley.iu.edu/riharbau/RePEc/iuk/wpaper/bepp2007-04-arbatskaya-mukhopadhaya-rasmusen.pdf
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    References listed on IDEAS

    as
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    Cited by:

    1. Kevin Hasker & Eren Inci, 2014. "Free Parking For All In Shopping Malls," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 55, pages 1281-1304, November.
    2. 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.
    3. 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.

    More about this item

    Keywords

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

    JEL classification:

    • L91 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Transportation: General
    • R4 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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