The Parking Lot Problem

Maria Arbatskaya (), Kaushik Mukhopadhaya and Eric Rasmusen ()

No 2007-04, Working Papers from Indiana University, Kelley School of Business, Department of Business Economics and Public Policy

Abstract: If there is competition for access to an underpriced good such as a free parking spot, the competition can eat up the entire surplus, eliminating the social value of the good. There is a discontinuity in social welfare between “enough” and “not enough,” with the minimum social welfare being at slightly too small a parking lot because of the rentseeking efforts of drivers. Uncertainty over the number of drivers actually increases social welfare if the parking lot size is set too small; if it is set optimally, the parking lot size will be well in excess of mean demand.

Keywords: rent-seeking; all-pay auction; timing; capacity size; queue (search for similar items in EconPapers)
JEL-codes: L91 R4 D72 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cdm
Date: 2007
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Related works:
Working Paper: The Parking Lot Problem (2001)
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