Residential parking in vibrant city districts

- Models trade-off between residential parking and urban vitality.
- Urban vitality is determined by product variety and valued by residents and visitors.
- Determines welfare-enhancing shares of residential parking spaces.
- If only residents decide, residential parking is excessive.

Living downtown can be advantageous because it enables convenient access to a variety of shopping and leisure activities, but a major disadvantage is the difficulty of finding a parking spot. We formally model the trade-off between privileged parking for residents and economic vitality in terms of the product variety available in a vibrant city district and identify situations in which assigning on-street parking spaces to residential parking constitutes an optimal policy, both from a welfare and a resident perspective. However, we demonstrate that privileged parking for residents is unlikely to result in a first-best allocation of on-street parking spaces, if an efficient level of economic vitality is to be ensured at the same time.