XSU is located in the middle of a residential neighborhood. The residents of the
ID: 1202892 • Letter: X
Question
XSU is located in the middle of a residential neighborhood. The residents of the surrounding 4 blocks notice that street parking is a problem while classes are in session (i.e. Monday through Friday Sam to 4PM. mid August through mid-May except for breaks) or during special events (athletic contests, etc....). Students and staff can be viewed driving around looking for parking spaces, even though there are spaces available in some of the parking lots on the edge of campus. Residents complain that the extra traffic leads to more small accidents, and that their visitors (personal or service related) cannot park near their intended visit sites. Students and staff complain that there are not enough parking spaces. A task force is constituted, and comes up with the following recommendation - either XSU builds sufficient parking spaces or the city institute a permit parking system. If XSU builds more parking lots, the construction and maintenance would have to come from parking fees. The recommended parking permit system that requires permits for street parking within the 4 block radius. There would be set number of permits with each household getting one permit, and the rest to be sold to anyone who wishes to buy them. The revenue from the permit sales would be used to fund a parking officer who would enforce the permit system where any violator's vehicle is towed and assessed a fine of $2,000 plus towing. Explain whether there is a shortage or a surplus of parking spaces in XSU lots, Explain whether there is a short or a surplus of parking spaces on the street Is parking an externality? Explain. Explain under what conditions (if any) the building of additional parking lots will solve the problem. Explain under what conditions (if any) will the permit system solve the problem. What are the likely effects of either recommendation on the neighborhoods more than 4 blocks awav ?Explanation / Answer
1) Street parking is a problem which implies there are ample (surplus) spaces in XSU lots.
2) There is shortage of parking spaces on streets
3) An externality results in a negative spillover effect when it reduces the welfare of others. Since parking reduces the space which is available to any other automobile, it acts as an externality.
4) Building of additional parking lots will solve the problem if they are constructed away from the streets and close the XSU lots
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