Residential parking costs and car ownership: Implications for parking policy and automated vehicles

Residents are often offered on-street parking at a fraction of the market price which may cause excess car ownership. However, residential parking costs are difficult to observe, so we propose an approach to estimate implicit residential parking costs and then examine the effect of these costs on household car ownership. We apply our approach to the four largest metropolitan areas of the Netherlands. Our results indicate that for city centres, annual residential parking costs are around €1000, or roughly 17 percent of car ownership costs, and are more than double the costs in the periphery. Our empirical estimates indicate that the disparity in parking costs explains around 30% of the difference in average car ownership rates between these areas and corresponds to a price elasticity of car demand of about −0.7. We apply these estimates to gauge the potential implications of automated vehicles which suggests that, if residents no longer require parking nearby their homes, car demand in city centres may increase by 8–14 percent.