On-Street Parking Supply Policies: An empirical evaluation

In the urban economics literature on on-street parking, pricing policies have received a lot of attention. In contrast, parking policies that restrict supply by setting the quantity of on-street parking and by imposing time limits have largely been ignored, despite parking supply being a key policy parameter. This paper evaluates Melbourne’s on-street parking supply policies by estimating the marginal external cost of parking (MECP) associated with cruising for parking. Using unique administrative parking data that also covers the night period - when parking is unregulated, we estimate the MECP at a very detailed level. We find that, conditional on other parking policies, i.e. the level of parking prices and parking time limits in place, on-street parking is oversupplied across the whole city, except for a few blocks with very high demand. This implies that from a welfare perspective, either supply must be reduced or parking time limits should be substantially relaxed. Second, we demonstrate that the costs of cruising are substantial when parking is unregulated.