The political economy of parking charges in “first” and “second-best” worlds

The paper explores ways in which economists view parking charges within the context of policy formulation. Recent trends in economic analysis have taken more note of the institutional structure in which decisions are made; institutions embracing both formal structures such as laws but also the de facto ways in which actual outcomes emerge. While this distinction is often applied to final consumers, it also has relevance for those setting and enforcing micro economic policies such as parking policies. Taking a neo-classical economic approach would lead parking policies in one direction, but allowing for transactions costs, hysteresis, second-best factors, game-playing, etc. as well as normative concerns over equity of various kinds, all of which reflect institutional structures, can lead into a variety of others. The aim is to explain why current parking policies deviate from classical economic ideals.