Opportunity Pricing Improves Urban Parking Experience
Imagine if you will a city in which the price of renting a parking space can be adjusted moment by moment to adapt to the immutable laws of supply and demand. It’s called opportunity pricing and it’s something the airlines have known about for years. Want to take the kiddies to Disney World over February break? It’s gonna cost ya. The same trip can be made in July for 1/3 the money.
Now take that logic and apply it to parking. You are approaching New York City and need a place to park your car. You check your app and see there are plenty of spaces in Queens priced at $1.00 per hour. There’s also a space on Broadway one block from your destination, but it’s priced at $25.00 per hour. What do you do? Ah, the magic of Adam Smith’s invisible hand in action.
Professor Itzhak Benenson of the Department of Geography and Human Environment at Tel Aviv University says, “Urban parking prices are now uniform over large urban areas, but this doesn’t reflect neighborhood-specific supply and demand. Underpricing results in long and often unsuccessful searches for parking in areas where demand exceeds supply, while overpricing leads to low occupancy and hampered economic vitality.
“If the number of free spots in one specific area decreases, their price increases. So some of the spots are always vacant, because they end up being very expensive,” Benenson says. “With adaptive prices, a driver who really needs to park close to a destination can now find a space. Any resulting economic inequity is resolved by means of special ‘free of charge’ permits or discounts.
“When you have an app that informs you about parking prices when you drive to your destination, you can resolve any number of parking and traffic issues. Our GPS-based Parking Pricing Algorithm, a geography-specific algorithm for establishing on- and off-street parking prices, guarantees a predetermined uniform level of occupation over an entire area.”
Tested in the Israeli city of Bat Yam, the real time adaptive parking prices created 90% parking occupancy without the installation of heavy and expensive equipment. “We truly believe that adaptive parking pricing is the future of cities,” says Benenson. “This is a mechanism that can stop people from coming into the city centers and searching for a parking spot for hours on end and nobody would be charged more than necessary. On street parking is public property and should be managed as public property.”
As cities struggle with the problem of congestion, opportunity pricing for public parking spaces may be one way to better manage the flow of traffic into and out of downtown areas.
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