Beijing, Guangzhou, Hanoi and Jakarta do control parking prices, so I assume the practice is common throughout China, Indonesia and Vietnam.
|The parking operator at this shopping centre in Jakarta was exceeding the regulated prices late in 2009. The official rates specified Rp2000 (US20c or so) for the first hour and Rp1000 for each subsequent hour.|
Such a policy seems unwise.
- The politics of parking pricing is difficult enough for public-sector parking. On-street parking pricing and state-run hospital parking prices seem especially controversial. Why add to your troubles by also trying to control private-sector parking?
- The usual economists' arguments against price controls apply here. With regulated prices we inevitably suppress supply, inflate demand and throw away the information value of market prices.
- In certain cases, such as airport parking, there may be a monopoly problem so that high parking prices are a sign of market failure, which could justify regulation. But within urban areas this is rarely the case. In neighbourhoods with commercial parking, there is usually competition.
- Finally, in China, Vietnam and Indonesia, private car owners tend to be high-income people. Why does an elite group need to be protected from market prices?
I am assuming that the price controls keep the prices lower than the market would. But is it true?
- I am pretty sure of this for Hanoi, where there are many complaints of saturated parking and of high black-market parking prices, suggesting official prices are much too low.
- In Jakarta in late 2009, many parking lots were charging slightly higher than the official rates. This actually prompted enforcement action in February 2010. Clearly, if parking prices were deregulated in Jakarta they would generally be higher than they are now under the strict price controls. There has recently been talk of a parking price revision in Jakarta but deregulation of parking prices is not yet on the radar.
- In 2008 Guangzhou’s price controls become more restrictive than before, provoking complaints from the private parking industry. In Guangzhou our study found most prices were at the city-decreed price level but some were below it. So maybe the official rates in Guangzhou are not yet too different from market prices.
|Officially sanctioned parking prices in Guangzhou.|