The tragic death of parking karma

“It is no doubt ironic that the motorcar, superstar of the capitalist system, expects to live rent-free”.—Wolfgang Zuckerman

“Jerk” is a word that comes up often in discussions of the emerging sharing economy (see for instance here or here). The apps that let you pay for your parking spot have been a recurrent target for all sorts of creative name-calling.

We know how they work: the app users who have a parking spot can notify other app users when they are about to leave. The app mediates a quick transaction between the person leaving and the person who is happy to pay for the spot, and collects a small percentage of the transaction. The process repeats itself until late in the evening when the last person leaves without finding anyone interested in paying them for the parking spot. These apps are great for people who go home early in the evening, when other users are still looking to get parking in the cool neighborhoods. I would not be surprised if evidence surfaced in a few months that these apps received a big chunk of funding from conservative groups which want everyone to go to bed early. More seriously, what should we think about business models which sell us convenience by organizing access to a good that could otherwise be accessible for free?

Here are a few points we might want to consider when deciding whether or not to use the apps:

• The good:

The apps bring increased convenience: less time is spent on looking for parking, and when you add up all the hipsters looking for parking in the Mission, that means a lot less carbon dioxide released in the atmosphere, less congestion in cool neighborhoods and more peace for their residents.

• The bad:

The apps create a hurdle for non-app users to access a parking spot. They effectively create a sub-section of drivers who get faster access to a valuable good in exchange for money.

• The question:

Is this business model equivalent to “scalping a public good” to use Josh Constine’s explicit expression or are the apps making our lives easier? Are they “auctioning public property for profit” or “selling valuable information”?

The City of San Francisco is clearly siding with the former, and it has taken a stance against the peer-to-peer bidding apps. The City Attorney issued a cease-and-desist order to MonkeyParking:

MonkeyParking has complied with the City’s ordinance, and suspended its operations in San Francisco:

However, if the City is allowed to charge for parking spaces as a tool for congestion regulation, why not let a private company do the same and help regulate demand for parking through a free-market arbitration?

The first element of answer has to do with the nature of parking spaces. This is where we get philosophical: What are parking spaces? They are what economists call “commons goods”, which means that they are available to all potential users but also subject to congestion (more information here).

Parking spaces are publicly-owned, but they are not a “public good”, in the strict definition of the term. Public goods are characterized by two properties:

(1) they are non-excludable — meaning that non-paying consumers cannot be prevented from accessing it;

(2) they are non-rivalrous — meaning that one person enjoying the good doesn’t prevent another person from enjoying the good.

Typical examples of public goods include: fresh air (the one we breathe and the excellent radio show), knowledge etc.

So from a technical point of view, parking spaces are not a public good: they are excludable (think parking ticket), and they are “rivalrous” (when the parking space is taken by your car, it is no longer available to me).

The next logical question in our quest for clarity is thus: Should this non-public good be privatized?

I would also argue, and this is part two of the anwer, that these apps are not really abiding by the principles of free market. Let’s take the example of ParkModo, one of the three apps directly mentioned in the City Press Release:

If it is true that the app is indeed paying drivers to park and hold parking spots so that it can make a profit by shelling them to the highest bidder, they would be rigging the market [I checked the Craigslist jobs and gigs listing for driver positions for the past few weeks, and found ads for Uber and Lyft, but none of ParkModo. They might have been removed prior to this search].

Even if our parking karma is through the roof, there is no way that we will have a fair access to parking spots if businesses are paying drivers to occupy them and passing them to their clients for a fee.

The virtuous circle of variable-rate parking

The argument has been made (here) that in cities such as San Francisco where land is very valuable, curbside parking is underpriced. As the peer-to-peer parking apps show, drivers are clearly happy to pay more for the increased convenience of a desirable parking spot.

“Curbside parking spots, typically the most conveniently located and most accessible spots on a block, are often priced lower than nearby garage spots. Because these spots are desirable, they are often full. Drivers circle their destinations looking for available curb spots, paying for the cost of the spot with their time and wasted gas rather than in dollars as they likely would in a free market. Donald Shoup, the expert on all things parking, estimates that 30% of downtown urban traffic congestion is caused by drivers who are cruising for parking” Source

The San Francisco City Charter indicates that revenue from parking meters is used to support public transit. This lays the basis for a virtuous circle where the profit generated by curbside meters benefits car users (by making convenient spots easier to find), and also benefits public transportation users (with more funding for better service).

Putting cities in charge of coming up with adjustable parking fares will compound the interests of all the constituencies involved: parking users (who want more great-location parking spots, and who also tend to patronize local businesses), neighborhood residents who want less aggressive drivers around, and enjoyers of clean air (all of us). Hopefully, smart meters will be developed soon so that the apps can be outsmarted and profit shared more widely.