Paid parking in cities: Regulating parking demand and consequences for the retail sector

Abstract

In this paper we analyse the effectiveness and consequences of introducing parking fees. It is argued that pricing measures are effective for combating inefficiencies in parking behaviour caused by distortions such as information problems and costs of parking congestion. However, given the structure of the marginal external costs involved, pricing measures are not attractive for addressing other negative externalities such as the negative effect of parked cars on the attractiveness of areas such as historical centres and residential areas. Therefore, a mixture of pricing and quantity regulation is needed. Furthermore, it is often stated that paid parking has negative effects on retailing. This issue was addressed by estimating two models of cross-sectional data from Dutch cities and panel data at the city-district level in Amsterdam, respectively. The first analysis suggests that aggregate parking capacity at the city level has a limited impact on the success of central shopping areas. In the second model we find that an introduction or increase of parking fees appears to have no negative consequences on the urban retail sector.