What’s the best policy for managing spillover parking?

By Chris McCahill

A new study in Transportation Research Part B suggests that while minimum and maximum parking requirements can be effective in some ways at managing spillover parking, they are anything but a one-size-fits-all approach. Using economic models, researchers tested the effects of different pricing and regulatory policies on nearby residents, local shoppers, and non-local shoppers of an urban mall or other major retailer. They found that regulating the supply of on-site parking is only effective if the retailer has enough market power to adjust the price of goods, and even more so when parking is also priced accordingly.

The study looked specifically at four different policies: 1) on-street parking fees, 2) on-site parking fees, 3) on-street parking regulations (e.g., parking permits), and 4) on-site capacity regulations (i.e., minimums or maximums). The authors conclude:

“In the limiting case where the mall has no market power, the relative performance of the policies is clear cut. Both a curbside parking fee and mall parking fee regulation can support the social optimum. Mall parking capacity regulation is useless, while a curbside parking ban can be beneficial or harmful depending on the severity of curbside congestion.”

If the retailer has substantial market power, however, the situation is more complex. Parking fees can help alleviate spillover parking but apparently not without reducing the retail markup of goods. In this case, on-site parking capacity can be the most important single lever, but the best solution is typically a combination of policies.

The study also found that mitigating spillover parking generally benefits residents at the expense of the retailer, while shoppers can be winners or losers. The retailer can, however, occasionally benefit from on-street fees and regulations if it wants to favor local shoppers. And this all depends, of course, on the severity of congestion in the area and the amount of shopping that occurs.

Chris McCahill is the Deputy Director at SSTI.