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The Political Economy of Pricing Car Access to Downtown Commercial Districts

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  • Bruno De Borger
  • Antonio Russo
Abstract
We study the political economy of pricing access to downtown commercial districts, using parking fees as the main example. A spatial equilibrium model is embedded in a political economy framework in which special interest groups (urban and suburban retailers, local residents) lobby the city government. We have the following results. If downtown and suburban stores sell a homogeneous good, the local government underprices downtown parking if suburban stores sell at small enough margins compared to traditional downtown retailers. If goods are heterogeneous and some consumers engage in multiple-stop shopping (i.e., shop both downtown and in the suburbs), suburban stores will not lobby at all; lobbying by downtown retailers leads to parking fees below the social optimum. Furthermore, local residents do not necessarily lobby for high parking fees on downtown shoppers. If a decline in urban stores leads to negative externalities (urban blight) they may join forces with downtown retailers and lobby against high parking fees on shoppers.

Suggested Citation

  • Bruno De Borger & Antonio Russo, 2015. "The Political Economy of Pricing Car Access to Downtown Commercial Districts," CESifo Working Paper Series 5294, CESifo.
    • Handle: RePEc:ces:ceswps:_5294
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    Cited by:

    1. Thumm, Alex Jürgen & Perl, Anthony, 2020. "Puzzling over parking: Assessing the transitional parking requirement in Vancouver, British Columbia," Transportation Research Part A: Policy and Practice, Elsevier, vol. 139(C), pages 85-101.
    2. De Borger, Bruno & Russo, Antonio, 2017. "The political economy of pricing car access to downtown commercial districts," Transportation Research Part B: Methodological, Elsevier, vol. 98(C), pages 76-93.
    3. Ersoy, Fulya Yuksel & Hasker, Kevin & Inci, Eren, 2016. "Parking as a loss leader at shopping malls," Transportation Research Part B: Methodological, Elsevier, vol. 91(C), pages 98-112.
    4. De Borger, Bruno & Glazer, Amihai, 2017. "Support and opposition to a Pigovian tax: Road pricing with reference-dependent preferences," Journal of Urban Economics, Elsevier, vol. 99(C), pages 31-47.
    5. Inga Molenda & Gernot Sieg, 2018. "To Pay or Not to Pay for Parking at Shopping Malls: A Rationale from the Perspective of Two-sided Markets," Journal of Transport Economics and Policy, University of Bath, vol. 52(3), pages 283-28-297.
    6. Ren, Tao & Huang, Hai-Jun, 2020. "A competitive system with transit and highway: Revisiting the political feasibility of road pricing," Transport Policy, Elsevier, vol. 88(C), pages 42-56.
    7. Olus Inan, Murat & Inci, Eren & Robin Lindsey, C., 2019. "Spillover parking," Transportation Research Part B: Methodological, Elsevier, vol. 125(C), pages 197-228.

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    More about this item

    Keywords

    parking fees; lobbying; retailers; multiple-stop shopping;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise

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