This paper uses a formal model to examine the welfare gains from a marginalincrease in the price of on-street parking. The benefits of such a policy are shown to dependon the improvement in search externalities in the on-street parking market itself, plus effectson other distorted urban transport markets, including congested freeway and backroad use,mass-transit and off-street parking.The paper makes two further contributions. The model is sufficiently general thatseveral well-known results from the parking literature emerge as special cases. The model isused to review the existing literature and highlights findings in separate parts of literature.Finally, a numerical simulation model is used to investigate the order of magnitude of anoptimal urban parking fee. In particular, these results confirm the importance of taking intoaccounts effects on other distorted transport markets when deciding upon the level of the price for on-street parking. The model confirms that while parking pricing reform may lead tosubstantial improvements in parking search times, there is little overall impact on roadcongestion levels.JEL Codes: R48.
This paper is a revised version of the introductory chapter in my doctoral dissertation, Calthrop(2001). I would like to thank all Committee members, particularly Piet Rietveld (Free UniversityAmsterdam) and Stef Proost and Erik Schokkaert (K.U.Leuven) for useful comments. In addition, this paper has been influenced by conversations with Richard Arnott, André de Palma and Bruno DeBorger. All errors remain my own. I recognise funding from F.W.O. (Funding for Scientific Research -Flanders) contract number G.0220.01.