Parking prices and the decision to drive to work: Evidence from California

Abstract

This paper explores the impact of parking prices on the decision to drive to work using a California household travel survey dataset and a discrete choice model. The paper tackles estimation challenges posed by insufficient parking information. The first challenge is the estimation of parking prices for those who do not drive, which is addressed by using a sample selection model. The second challenge is to understand the effect of the extent of the prevalence of Employer-Paid parking coupled with incentive programs offered in-lieu of parking. To address this challenge, two extreme scenarios are examined, and a range for the marginal effects of parking prices is estimated; one scenario assumes everyone receives Employer-Paid parking coupled with in-lieu of parking incentives, and the second assumes that no one is offered such incentives. The results suggest that higher parking prices reduce driving, regardless of the followed approach. It is estimated that a 10% increase in parking prices leads to a 1–2 percentage point decline in the probability of driving to work. This range varies with initial parking prices, where the lower end of the range increases at a decreasing rate, and the higher end peaks at $2.5 and decreases with higher prices. Moreover, there seems to be no evidence of sample selection bias. The evidence confirms that parking pricing can indeed be an effective transportation demand management tool.