Lobbying and the political economy of pricing car access to downtown commercial districts

Bruno De Borger and Antonio Russo

Working Papers from University of Antwerp, Faculty of Business and Economics

Abstract: We develop a positive theory of pricing car access (by parking fees or cordon tolls) to downtown commercial districts. The model accounts for the special interests of downtown retailers and competing superstores at the edge of the city, and studies how lobbying by both groups shapes the government’s policy. We find that downtown retailers typically have steeper lobbying contribution schedules than superstores, which induces the government to underprice central roads and parking spaces. This result is strengthened if some consumers visit both downtown and edge of town retailers. The presence of an alternative travel mode (e.g. public transport) does not weaken downtown retailers’ incentives to oppose car tariffs. Finally, extending the model to allow for lobbying by residents within the downtown retail district we find that residents may lobby for higher or lower parking fees, depending on their relative concern for the vitality of the central district. As a consequence, depending on parameter values, the outcome of lobbying may produce car fees below or above first-best levels. We argue that our results are in line with empirical observations.

Keywords: Parking; Road pricing; Lobbying; Retailers; Superstores (search for similar items in EconPapers)
JEL-codes: D43 D72 H23 R41 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2015-05
New Economics Papers: this item is included in nep-mkt, nep-pol, nep-tre and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:ant:wpaper:2015012

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