Curb Parking

Curb Parking is a Monopolistic Good

People often regard curb parking as a free entitlement provided by the government.

Those parking spaces, however, do not resemble public goods at all, because they present neither the characteristics of non-rival nor the features of non-exclusive (Shoup, 2017, p. 296). Curb parking is closer to a monopolistic private good.

First, curb parking is rival since one parking space only serves one car at a time. One driver’s occupation reduces the parking lots left for someone else. Second, charging curb parking is easy. Drivers who park their cars on the curbside are the exclusive beneficiaries to pay for the charge. Third, curb parking market is monopolistic as its demand curve slopes downward without close substitutes. Calthrop and Proost (2006) may disapprove this cogitation in that they viewed on-street and off-street parking as substitutes in their evaluation of optimal on-street parking regulation. Nonetheless, Mussa and Rosen (1978) pointed out that due to the distinctive individual preferences, consumers do not place the valuations on all attributes of goods but only on those that is important to them. Therefore, these two types of parking are far from perfectly interchangeable. We can further explain this idea in the following situation. Suppose one driver visits an unknown area with no prior knowledge of nearby parking facilities;

the anxiety arising from the unfamiliar environment will induce the driver to choose curb parking with better accessibility and visibility over off-street parking. The driver

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tends to take this option because on-street parking, with its location along the curbside, appears to be a more approachable easy-option. Whereas, the off-street parking which is often set underground or concealed in the alleys, is simply out of reach. The off-street parking, therefore, is not a close substitute for the on-street parking.

If curb parking is a monopolistic good providing the advantage of accessibility and visibility, the government, as its exclusive supplier, then becomes the monopolist. From a body of past research, a monopoly market often meets three essential features: high entry barriers, no close competitors, and producer as the price-maker. Take Taipei’s curb parking market as an instance; high barriers have always been the Parking Facility Act which confers unwavering authority to the government but prevent new parking suppliers from entering in. This strict statutory not only forces out all possible competitors, making the market a typical government-granted monopoly but also entitles the government a robust pricing capability. From such regulation, Department of Transportation of Taipei City (DOT) is the sole authorized agency that reserves a monopolistic control over the land supply for the curb parking in Taipei.

Curb Parking Revenue is Land Rent

While countries around the world gradually accept the idea of charging the market price to control curb parking’s occupancy and turnover rates, they implement curb parking fees for different reasons. One of the most common propositions perceives such pricing as a policy to resolve traffic problems. Arnott, De Palma, and Lindsey (1991) formalized Vickrey's idea in the bottleneck model and explored the effects of parking fees on morning rush-hour traffic congestion. This model later became the most widely

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used analysis scenario in the parking pricing research (Glazer & Niskanen, 1992; Qian, Xiao, & Zhang, 2011; Verhoef, Nijkamp, & Rietveld, 1995). Despite the popularly accepted views, Shoup (2017, pp. 505-509) suggested that charging parking spaces can also be a fiscal policy in the context of Henry George’s proposal. In Henry George’s publication (1879), Progress and Poverty, he argued that taxing land values is the

“naturally ordained” source of government revenue. This is because, first, land taxes are just and equal. Land owners are unlikely to shift the tax, and the revenue from land taxes are returned to communities who create the land values. Second, land taxes are apt to promote “highest and best” use of the land since the need to raise cash to pay taxes may induce owners to put their land in the use that can yield the highest rent.

So what do these ideas have to do with curb parking? First, parking is one of the most important intermediate goods in the modern market economy because most transportation activities started from a parked vehicle and terminated by parking it again (Hasker and Inci, 2014). No matter vehicles are parked, or in transit, they take up a tremendous amount of land. Therefore, charging market prices for curb parking is similar to taxing the use of the land. Only drivers who receive a peculiar benefit from parking ought to pay for this land rent. Second, charging the right price for curb parking should result in the efficient use of land, i.e. the highest and best use or the highest occupancy rate.

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Curb Parking Revenue is not only Land Rent, but Marxian Monopoly Rent

In the preceding paragraphs, we mentioned that curb parking market is a government-granted monopoly and curb parking revenues is a form of land rent. Adam Smith (1950), in The Wealth of Nations, defined that the rent of land is the rent to monopoly, which is now known as the monopoly rent. Though, based on Smith’s definition, curb parking revenue, rather than being a transportation or fiscal policy, may resemble monopoly rent. The shadowy and amorphous research on this concept has resulted in difficulties to interpret the true meaning of the monopoly rent (Evans, 1991). We, therefore, follow Evans’ work on reviewing the literature of various authors in monopoly rents. He discussed different paradigms in depth and systemized the scattered opinions into three possible ways.

The first term, “Class Monopoly” refers to the idea that the “class of landowners”

collect land rents from their private ownership; these rents are called the monopoly rent.

The studies of Say (1861) and Senior (1938) both accord with this idea of monopoly rent. They proposed that landowners exert a kind of monopoly over farmers and such monopoly derives from the use of natural resource − the land. The application of this concept to curb parking spaces seems unsuitable in the sense that most studies of class monopoly focused on farmlands and we cannot find the “class” of owners nowadays.

The second usage, “Site Monopoly,” explains the idea that the monopoly of distinguishable sites provides the landowner monopoly rent. Nevertheless, Evans (1991) pointed out that this interpretation of monopoly rent is identical to the so-called

“differential rent” because landowners display no monopolistic behavior in this case.

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They cannot restrict land supply for a specific use to price the rent. In comparison with the case of curb parking, the government grasp monopoly power over the supply of parking space. Accordingly, this concept of monopoly rent is again inapplicable to curb parking revenue.

The third usage describes the concept proposed by Marx (1976) and was named naturally as “Marxian Monopoly Rent.” Marx came up with a more detailed view of the land rent by distinguishing it into differential rent, absolute rent, and monopoly rent.

He interpreted monopoly rent as the surplus over the other two rents. Such rent arises from an independent monopoly price for the products of the land itself. In turn, monopoly rent occurs when profits derived from monopolistic behavior and can be realized in the form of land rents (Evans, 1991). If we compare the curb parking revenue to the case depicted above, government authorities (i.e., landowners) behave like monopolists; they hold full right to curb parking’s supply and price decision. Since the revenue (i.e., land rents) collected originates from the exclusive use of curbside parking spaces, we should regard curb parking revenue as Marxian Monopoly Rent.

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