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Congestion & efficient markets for parking spots

Much traffic congestion in urban areas is caused by cruising for a parking spot.  Shoup (2005) suggested charging market-clearing prices for parking and leaving 15 per cent of parking spots vacant so that people can always park if they pay the requisite fee.

A small US technology firm Streetline Networks has added a twist to this that is being trialled in 6,000 of San Francisco’s 24,000 metered on street parking spots and in 11,500 of its off-street car parks.  This uses a wireless sensor network that announces either by displays on street signs or on maps on screens of mobile phones which parking spots are vacant at any time. Drivers can also pay for parking using their phone and can top up the parking meter remotely using their phones without returning to their car. This minimises parking search costs. The San Francisco trial, costing $23m, is an attempt to find an alternative to congestion pricing of roads although a modification whereby congestion is also priced would be of interest.   Either way the scheme uses pricing signals along with data on available parking spots to eliminate socially-wasteful searches for parking spots.

Another Firm, VehicleSense, is testing its wireless-sensor networks in parking areas along Interstate 95 in south-eastern Massachusetts. The idea is to give fatigued truckers better information on where they can pull off the road to get some sleep.

These innovative technologies could be put into practise in Australian cities such as Melbourne and Sydney.  Either as an accompaniment to congestion pricing or a substitute for it such schemes would dramatically reduce parking search costs and consequent traffic congestion


John Markoff, ‘Can’t Find a Parking Spot? Check Smartphone’, New York Times,  July 12, 2008.  

The Economist, ‘Spot Prices’, The Economist, September 17, 2008.

D. Shoup, The High Cost of Free Parking, Planners Press, Washington 2005.

4 comments to Congestion & efficient markets for parking spots

  • John Mashey

    Good notes, but there’s more, because the ability to help drivers find spots was actually a secondary consideration.

    See Services, for example.

    1) Parking is a major revenue source for many cities, and parking spot management is a real-time inventory problem. Unlike, for example, airline seat inventories, long managed via ultra-sophisticated pricing polices and operations research techniques, city parking spaces might be one of the worst-managed inventories I’ve ever seen. Can one imagine an airline doing well if it gave away many of its seats?

    2) Some of this comes from complex political issues.

    3) But much comes from the difficulties of getting good data. If a parking control officer writes a ticket, all they really know is that the car is there on an expired meter. They can’t easily tell how *long* it is been there.

    4) One of the original reasons for using the Streetline gear was simply to start understanding the real behavior. The nodes (epoxied on the parking spaces) know when cars arrive and depart, and in some emplacements, can measure speeds of cars passing by. Hence, as a side-product, cities can start building real-time traffic flow models as a fringe benefit.

    5) Of course, a parking control officer can be given a list of places to visit, or by using a handheld, may check in and find:

    “On the next block, 3 cars are 4 hours over, and here are their space numbers…”

    6) Normally (in US, I don’t know about Oz), metered spots yield about 50% from payments and 50% from fines. If people think there is a low chance of getting fined, they may well ignore the meter, and that is likely a rational decision. However, if people think it is almost certain that they will get caught, behavior changes. City managers generally prefer to move the mix to emphasize payments, as almost everyone is happier. People really hate getting tickets for being a few minutes over. Of course, even better is to get easily charged for the time you actually use.

    7) Of course, sensors work with unmetered spaces as well, i.e., where there are 30-minute, 60-minute, or 120-minute limits, now enforced by people running around marking tires.

    8) But, with smart meters in the mesh along with the per-spot sensors, you can do things like variable pricing, i.e., as Shoup suggests with the 15%-free models. You can also detect people putting in slugs in real-time, or trying to break meters…

    9) In general, underpriced parking represents a terrific subsidy for driving cars. While we all like to have free parking, whether that is a good way to allocate scarce resources… well, people should read Shoup’s insightful book.

    10) As an enlightening exercise, you might want to find out how much money Melbourne makes from parking…

    {San Francisco: FY 2007-2008:
    $31M: parking meters
    $36M: off-street
    $90M: fines
    $157M total
    See SF MTA.

    In general, wireless mesh sensor networks offer interesting chances for improving efficiencies of particular interest in both California and Australia, i.e., energy & water.

    See Grape Networks, for example, a small CA company that already has a branch on Oz.

    (Disclosure: I’m an Advisor for Streetline, was one for Dust Networks, have no connection with Grape Networks or Crossbow Technology.)

    However, none of these technologies offer any help for the terror of an American driver when he first encounters signs for Melbourne hook turns.

  • John Mashey

    (An earlier post may have gotten lost; I’ll try again).

    0) Streetline is one of a recent class of low-power wireless sensor network applications that bring widespread monitoring (and sometimes control) of the physical world into the Internet.

    A subset of the applications is especially relevant to current concerns regarding water usage and energy efficiency, both of which are of serious concern in California, and are (or should be) in Australia.

    Here are a few CA companies:
    Dust Networks, basic infrastructure, used by Streetline, and by others, especially for industrial control.

    Crossbow Technology, an early pioneer.

    Grape Networks does water monitoring, and has distribution in Australia. From the name, one of their early application areas is vineyards.

    Streetline Networks.

    Disclosure: I’m an advisor @ Streetline, and was so for several years @ Dust,and helped both of them get funded.

    1) Streetline’s long-term goal is to make cities smarter and more efficient. The “find a parking space” app isn’t even at the top of the list, although it’s very nice.

    The first priority is to give cities good inventory management of a major, perishable resource, i.e., parking spaces. Consider the care with which airlines track seats, using sophisticated operations research models to optimize pricing. Parking spaces form an inventory control problem, and it’s probably one of the more poorly-managed kinds of inventory in the world, because cities just haven’t had the tools. Imagine a store in which shoplifting ~= sales…

    It’s hard to make good decisions without good data. Even the very earliest experiments surprised people in revealing unexpected behaviors.

    2) The Streetline on-the-street sensors know when a car arrives and when it leaves. A parking control officer could be given a route sheet to direct them to the most likely places at the right times, or even better, use a handheld to find:

    “On the next block from where you are now, there are 3 cars more than 2 hours over.”

    This works even for non-metered spaces, and does not require people to run around chalking tires.

    3) But, with smart meters as well, one can do the variable pricing HC mentions. One can also discover people trying to put slugs into meters or rip them off.

    4) Nobody likes fines, but if people think they are unlikely to be caught, they may not pay, and this is pretty rational. In many places, more than half of the money comes from fines. If people get convinced they will get caught if they don’t pay … they will pay, and with variable pricing, one can use market methods to encourage more effective behavior. City managers would really prefer more payments and less fines, for numerous reasons. See SF MTA doc for a quick SF profile.

    5) As Shoup writes, free (or underpriced) parking represents a massive subsidy for cars. We all like free parking … but in many ways it can be a serious misallocation of resource with odd distortions in the ways areas are developed. In particular, Peak Oil is here, or coming soon, and those of us in car-dependent areas have to think hard about the way we build infrastructure.

    6) As a side-effect of having sensors for parking, which is *very* big business, a major profit center for some cities, well-placed sensors can also provide traffic-flow data without any extra hardware. [Cars going by have a different “signature” to the magnetometers than does stationary car.]

    Anyway, the long-range vision is to use these technologies to make cities work better for people, and more efficiently. I.e., it fits the model of “use computing power and networking to reduce energy use”. Of course, it takes tricky technology to make these last 5+ years on two AA batteries 🙂

    7) You might want to see how much revenue Melbourne gets from parking. Certainly, this sort of tech would apply to Melbourne & Sydney, and probably Brisbane, Adelaide, and Perth.

    8) But, none of these technologies would reduce the terror of an innocent American driver when first encountering Melbourne hook turn signs and thinking:

    “they *cannot* really mean that”.

  • hc

    These remarks are very useful for work I am currently doing. The main focus however is on congestion – the revenues were an important thoufgh secondary consideration. But as you point out – lots of revenue from efficient parking.

    i am a real fan of Donald Shoup.

  • John Mashey

    I’m glad they are of use.

    However, let me swap my technologist hat back into an old sales/marketing hat. Suppose you are trying to convince an organization (like a city government, but applies to companies) to change its operations, under various circumstances:

    1) You offer a way to do things better, and the customers agree, but it will take a while for benefits to accrue, and many of the beneficiaries are not the customers themselves, but others, and the benefits are diffuse and sometimes nontrivial to measure

    2) You offer a solution to a particular cost center, which will save them money, say by by reducing the workforce. [Of course, in city governments, and sometimes elsewhere, staff reductions are nontrivial. At Bell Labs, we used to build operations support systems of this sort all the time, but then, we had pretty good relationships with the telco unions, and there was a long-term approach of retraining staff whose jobs we were tech–obsoleting.]

    3) You sell to a specific *profit* center, showing them easily-measurable profit increases, including (in this case, as it happens, a 3-month payback (!)) …

    and as a side-effect, they get the benefits from 1) and maybe 2), and a clear path to do other useful things later.

    Rhetorical question: which of these is usually easier to make happen? Put another way, some kinds of improvements really rely on organizational behavior. I’ve seen things where many people agreed “X would be better”, but there was no practical way to get there.

    It is usually easier to sell to profit centers than cost centers, but even more important, it is absolutely crucial that some strong part of the customer organization really wants this to happen. Although there are many interesting apps to come, parking is the giant, profitable, low-hanging fruit that gets it started.

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