When dynamic pricing makes sense

use this fern for $2 an hour“Let’s move before the raise the parking rate.” Palmerston North, New Zealand, has the latest in dynamic pricing for parking. From Offsetting Behavior (via Marginal Revolution):

The 33-space carpark in the city’s Church Street has been kitted out with solar-powered sensors by local parking technology firm Frogparking that can tell which parks are occupied. Drivers pay for parking through their smartphone.

Frogparking has been providing ticketless parking systems to Palmerston North for a few years, but director Don Sandbrook said the new system was its most advanced yet, with cheaper parking if there were lots of spaces available and higher prices if they were nearly all taken. The tariff ranges from 50 cents to $2 an hour.

Makes sense to me: The system charges drivers according to the value of the space, which is determined by its scarcity; it is real-time; it provides some incentives to shop when the area is less crowded. And it doesn’t come with some of the problems that arts organizations have when implementing dynamic pricing: cuts in prices don’t send an adverse signal about the quality of the experience (50 cents or $2 an hour, a parking space is just a parking space); and it does not carry the problem that arts goods have of people being cautious about buying in advance if they think the ticket price might fall before the concert date – there are no advance purchases of parking.

Dynamic pricing: yes for parking spaces, still cautious about applying to the arts.

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