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Free Parking Isn't Free

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How much off-street parking should a restaurant have? 

This of course, is a pretty important question for the owner of the restaurant, since he or she will need to make sure that people can easily access the building in order to eat there. 

Any entrepreneur who wants to run a profitable restaurant will need to guess how many parking spots are needed, based on a variety of factors — such as proximity of housing, public transportation, and the personal preferences and demographics of the clientele.

If the owner supplies too little parking, then motorists will simply drive on by, opting to dine somewhere that offers an easily-accessible parking space. 

On the other hand, the owner doesn't want to provide too much parking because parking spaces use up square footage that could be used for other purposes such as a larger outdoor patio on a restaurant. 

Thus, in economic terms, parking spaces are no different than any other amenity that might be offered by a business, such as tables, bathroom stalls, air conditioning, and windows. 

And yet, in most urban and suburban areas of the United States, the number of parking spaces is not at all left up to entrepreneurs. Instead, parking resources are dictated and mandated by governments which decide for business owners how many parking spaces must be allotted to each structure. 

The mandates often take the form of a "per x" mandate. In some places, it might be a minimum number of parking spots per 1,000 square feet of retail space. In other cases, as with housing, there might be a minimum number of spaces per bedroom. A hospital might have a minimum number per bed. 

And what is the "correct" number of parking spaces? The government has no idea. As with all similar interventions in the marketplace, government mandates on parking spaces are really just arbitrary numbers picked by central planners. 

Why Governments Intervene 

As is often the case with local government interventions, however, the policy's origins are found in complaints from residents in the neighborhoods in question. 

In a world with government roads, of course, new restaurants and retail shops do not exist in a vacuum. They are placed near residential areas because businesses often are most profitable when placed near the people who might consume their product or service.

However, when government roads surround a private business, the owner might attempt to free-ride on the on-street parking spaces that are nearby. This becomes a political problem because local resident are also often themselves attempting to free ride on the government roads by parking on those same streets when at home.

As a result, many local residents might come home from work to find that diners at a nearby restaurant are all parked in front of one's duplex, house, or apartment building. Although these residents don't own these on-street parking spaces, they regard the spots as "their" spaces. Their motivation is the same as the shoppers: residents don't like to pay for parking. 

It's much easier and cheaper to just park on the street, so on-street parking becomes a battleground for workers, residents, and shoppers, all of whom want to park in the same place for free. 

So, at the next city council meeting, angry citizens show up and demand that the local government not allow any new businesses unless those businesses are forced to provide parking spaces of their own. 

The result is what we have today. Mandatory parking lots are plentiful. Moreover, in order to keep local residents and neighboring businesses happy, city governments often err on the side of overly-abundant parking for new development, which is why so many parking lots are half empty much of the time. 

The Real Cost of Mandated Parking 

Researcher Donald Shoup correctly points out that "free" parking is never actually free. It's true that government mandates on parking create the illusion that it's free. People drive up to a place of business, see an open space in a parking lot, and conclude it's "free." In reality, the price of goods and services are — all other things being equal — higher due to these mandates. The number of business are fewer, and competition is lessened. It becomes impossible to know how a certain plot of land might have been used had government mandates not dictated that parking lots be placed there. 

It's a classic case of "seen" costs versus "unseen" costs. The cost of too few spaces is always obvious: someone parked in "your' spot. The cost of too many parking spaces, however, often remains invisible since it's built into the cost of doing business for retailers, employers, and other producers who must somehow pay for those extra spaces. 

Supporters of parking mandates will of course respond that without these mandates, people will choke nearby areas with autos parked on the street as business owners attempt to push parked cars onto public roadsides. 

This, however, is just an argument against public streets or any other type of street that prices parking spaces at price levels that are zero or near-zero. 

How Parking Should Work 

In a functioning marketplace, of course, there is a market for parking spaces just as there is for anything else.

If an office building, shopping center, or restaurant is truly attractive to motorists, motorists will be willing to pay to park near those shops and eateries. If motorists aren't willing to pay the going market rate for parking in an area, they have two options. They can find some other form of transport, or they can shop or work in a place where parking is less expensive.

Moreover, in areas where parking is scarce, prices will be high for the space necessary to park. This means entrepreneurs — assuming government regulations don't prevent them — can then respond as they would to high prices for any other service or product: they'll start to provide more of the demanded good or service. If the price of parking becomes so high that renting out parking spaces becomes more lucrative than other businesses, then those less profitable businesses will be bulldozed to make room for more parking. 

Nor is it even necessary to totally abolish government roads to improve the situation. Modern technology can easily allow for on-street-parking prices to go up during peak periods, and go down during other periods. As on-street parking in neighborhoods becomes more expensive, private owners — like the owners in the more commercial areas — will begin to use more private neighborhood land for parking spaces. 

Moreover, there is no carved-in-stone reason why government roads need be built with space for on-street parking at all. Roads can still function perfectly well as thoroughfares while parking is relegated to privately-owned areas.

Resistance from Voters

Unfortunately, politicians are unlikely to allow market forces to work in parking spaces. Neighborhood residents would likely refuse an end to parking mandates because residents would be afraid that shoppers and workers would begin parking in their neighborhoods. Residents would also fight the implementation of any sort of paid-parking scheme for on-street parking because they want free neighborhood parking.

At the same time, many citizens can be expected to reject the "privatization" or "deregulation" of parking for the same reason they'd oppose anything that involves the words "privatization" or "deregulation." We'll be told that if parking spaces are privatized, then motorists will be "gouged," "exploited," and generally subjected to the cruel, cruel world of "market forces." Unless governments regulate and mandate parking, there will be a "free for all" and no one will know where to park, or how much it will cost. Greedy capitalists will make cities a playground for billionaires. 

(Nevermind the fact, of course, that this sort of deregulation would likely reduce the cost of housing and shopping for people who don't need to park a car anywhere — including many low-income people.) 

There are also cultural issues that complicate things. Many city planners are hostile to motorists and want to "get people out of their cars." Many of them believe that ending parking mandates can help do this.   Defenders of motorists, on the other hand, are sensitive to any move that appears to be "anti-car" or designed to make it harder for motorists to get around. 

Ending parking mandates, however, is not pro-motorist or anti-motorist.  It's simply a move that gets the government out of the business of centrally-planning parking spaces. Instead, allowing parking-space freedom would put consumers, owners, workers, and developers back in the driver's seat of determining how many parking spaces there really ought to be. 

Ryan McMaken (@ryanmcmaken) is the editor of Mises Wire and The Austrian. Send him your article submissions, but read article guidelines first. Ryan has degrees in economics and political science from the University of Colorado, and was the economist for the Colorado Division of Housing from 2009 to 2014. He is the author of Commie Cowboys: The Bourgeoisie and the Nation-State in the Western Genre.

Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.
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