Fixing Permit Parking (with Econ 101)

Yesterday there was a great post about coupon parking, and how it can be used in parking critical areas to make use of an entire street’s built parking infrastructure instead of using only permits to exclude people from using the spaces.

The economics of most markets look similar to the following chart, as price rises, more products will be made, but fewer will be bought, thus always bringing the price and quantity of the product in question to a balance.


A basic, simplified economic market.

But in parking, the supply is fixed (thus the vertical supply bar), and in most neighborhoods there is a surplus of parking, even when it is free (to the park-er).


The bronze is showing the gap between demand and supply at the price level.

In neighborhoods near popular areas (Minneapolis zones) the chart looks much more like this, with there being more demand for parking, when it is free, than there is demand. Thus the dashed line beyond the supply bar.


Here the hashed area and bronze highlight the people who are demanding parking (when it’s free) who are not able to receive it.

Dealing with this using permits leads to a discrimination against people who don’t live in the area. Excluding them from the marketplace makes the entire system less efficient as resources are not used. (Note to economist readers, while the value of the parking space might not be highest for those who live in the area, this would be the best case scenario for this style of solution).


The dashed line is the demand if those consumers/motorists, weren’t excluded from the market/parking.

This solution to the issue of parking can help keep property values higher for a city and maintain the American ideal of easy parking for those areas that have high intensity uses nearby.

Metering all these streets may also seem like a solution, but setting meter prices correctly is difficult and hinders the American ideal of cheap parking by residences. This would lower property values and tax rolls. Some might have said that this solution is ugly or expensive to collect, but the new parking meters in Saint Paul and Minneapolis can correct this by having less intrusive posts and fewer collection sites.


The bronze dot here signifies the price point for perfect balance of supply and demand. Unfortunately this is hard to find in terms of actual money, and not on a hypothetical chart.

While placing meters may be feasible, to protect property values and keep the status quo of a midwestern city’s parking availability, and maintaining the current permit system, meters should not be the only solution, but also be mixed with permits.


By mixing the permits and meters we can guarantee not causing mass disruption to residents, while still capturing the value of the rest of the stalls.

By mixing these approaches (or using coupons), we can create a more equitable and economically efficient parking system for the on-street parking we have already built.


Joseph Totten

About Joseph Totten

Joe is a graduate of Civil Engineering-Transportation and Urban Studies at the University of Minnesota, and has a masters degree from Portland State University. Born and raised in Saint Paul, Joe has worked with nonprofits and public agencies in MSP and Portland.