Street parking and the law of supply and demand

San Francisco is trying to shorten the hunt with an ambitious experiment that aims to make sure that there is always at least one empty parking spot available on every block that has meters. The program, which uses new technology and the law of supply and demand, raises the price of parking on the city’s most crowded blocks and lowers it on its emptiest blocks. While the new prices are still being phased in — the most expensive spots have risen to $4.50 an hour, but could reach $6 — preliminary data suggests that the change may be having a positive effect in some areas.

With the help of a federal grant, San Francisco installed parking sensors and new meters at roughly a quarter of its 26,800 metered spots to track when and where cars are parked. And beginning last summer, the city began tweaking its prices every two months — giving it the option of raising them 25 cents an hour, or lowering them by as much as 50 cents — in the hope of leaving each block with at least one available spot. The city also has cut prices at many of the garages and parking lots it manages, to lure cars off the street.

It is too early to tell whether the program is working over all, but an analysis of city parking data by The New York Times found signs that the new rates are having the desired effect in some areas.

Fascinating in terms of how human behavior and decision-making intersects with market behavior in what would not generally be thought of as a market situation.

It also has a green initiative behind it:

The $24.75 million transportation project will help ease congestion and air pollution by adjusting the parking fee based on sensors that report how many empty spaces there are as well as length of time a vehicle remains parked in a single spot. According to The Chronicle, the goal of the city-wide roll-out is to “is to prevent cars from circling the block looking for parking and to reduce congestion and air pollution.”

The Chronicle reports that “the city charges $2 to $3.50 an hour to park at a meter, depending on the neighborhood.” With the new variable rates, prices can range from $0.50 to $6 per day, with special event rates going up to $18 based on the economics concept of supply and demand.

San Francisco anticipates to collect more revenues from parking meters as a result of the new SFPark initiative, but less in parking fines and citations.


Cooper, Michael and Jo Craven McGinty. “A Meter So Expensive, It Creates Parking Spots.” The New York Times. 15 March 2012.

SF Sets Precedent for Variable Rate Parking Meters.” 27 July 2010.


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