This Prof Gets it Right

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This Prof Gets it Right

I felt the following article from the University of Florida Alligator was so right on the mark that I would past it here for all to read. These are the facts. You can try to change the economic laws but in the end, following the rules of supply and demand is the only solution. If the demand goes up and the supply remains the same, the price must increase. That is the only true way to solve the parking issue. Its fair, makes perfect sense, and works immediately. Read on, Matthew has the floor:

You’re late for school. The time is 9:30 a.m. and you’ve just
pulled onto Gale Lemerand Drive, hoping to find a parking space in the
commuter lot. After searching for fifteen minutes, you give up and head
to the O’Connell Center lot. Sorry, no luck – this lot is full, too.
Despite being a bad way to start the day, thousands of students face
this situation. The question is, how do we remedy the problem?

While
teaching an introductory economics course over the summer, I had an
opportunity to discuss the parking problem with my class. The
resonating opinion of the students was that parking decals are too
expensive and spaces are too few. I asked my students to pretend they
were UF President Bernie Machen and propose solutions.

Some
proposals included banning parking for freshmen, opening faculty lots
to students and lowering parking fees or eliminating them altogether.
Most UF students would be elated at the arrival of reduced parking
prices. However, most students (and people) have a misunderstanding of
basic economic principles. The real answer is to raise the decal price.

The
fundamental economic problem confronting UF parking is a shortage. In
economic terminology, the quantity demanded of parking exceeds the
quantity supplied. In 2003, Transportation and Parking Services sold
nearly 27,526 parking decals for about 19,371 available spaces,
resulting in around a 42 percent oversell. Overselling is acutely felt
in the commuter lots with about 7,655 decals sold for only 3,393
spaces, about a 125 percent oversell.

The shortage of spaces is
only part of the problem. Costs of not being able to find parking
include missing class, wasted gasoline and added road congestion while
you drive around trying to find a parking space. These costs add to
pollution levels and greenhouse gases, which economists refer to as
negative externalities.

Despite my class’ recommendation,
reducing or eliminating fees would only aggravate the problem by
increasing demand and deepening the shortage. The solution, according
to a 1996 winner of the Nobel Prize in economics, William Vickrey, is
to increase the price of parking.

In economics, when a good
faces a shortage, one way of removing the shortage is to raise prices.
Parking, while expensive, is actually priced too low, according to the
rules of economics. The scarce spaces available are not allocated to
the students most willing and able to buy them. By increasing prices,
the shortage of spaces is eliminated by reducing the quantity demanded
of spaces.

By raising prices, the probability of finding a
parking space increases because fewer students will buy a parking
decal. Not only do higher prices reduce or eliminate the shortage, but
the inefficiencies caused by time wasted hunting for a space are
removed. This means you miss less class, waste less gasoline, and pump
fewer greenhouse gases into the atmosphere – benefits which may exceed
the cost of a higher decal.

You may not like the solution, but you should have a better understanding of the economics behind the student parking problem.

Matthew Salois is a graduate student studying food and resource economics.

Amen

JVH

 

 
 
 
 
 
 
 
 

John Van Horn

John Van Horn

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