Much has been made over the last few months about the District’s decision to auction off spaces to car-sharing companies, rather than allow the market’s first mover—-Zipcar—-have them all for free. The argument for doing so is that charging market prices for the use of curbside parking spaces will raise cash for the city, and that competition will lead to better services and lower prices for consumers.
Some observers complain that forcing car-sharing companies to pay a lot more than an individual car owner would for their space is a tax on something that the government should instead be encouraging. Others point out that companies won’t necessarily lower their prices that much to attract customers.
The bigger question, it seems to me, is whether we need competition at all. The inaugural auction led to Zipcar losing 80 percent of its curbside parking spaces. That doesn’t dramatically impact the total number of spaces available to Zipcar users, since most of them are on private land. But it definitely lessens the utility of the service. Furthermore, I presume that the new players in the market will be going after private spaces as well, which will confine Zipcar’s ability to expand, and likely drive up the prices of those spaces.
The thing is, car-sharing isn’t like many other markets, where you’re free to choose between a bunch of options that have equal access to resources. There’s a finite number of spaces, so the convenience of belonging to any one service—-and let’s face it, nobody wants to pay membership fees for more than one—-decreases with the number of companies they’re split between.
Sure, it’s never a good idea to allow one company to have a complete monopoly. But governments have long coped with this problem by creating regulated monopolies, like power utilities, that are subject to price restrictions and have an obligation to provide equal access to services.
This makes most sense in systems where greater scale conveys direct benefits to users. Think of it in terms of Capital Bikeshare: The city awarded one contract, and sets prices, and is helping the contractor build out more infrastructure as quickly as possible. If the city allowed multiple competitors into the bikesharing market, consumers would likely lose out.
It’s water under the bridge now, but I’m surprised more thought wasn’t given to the idea of awarding Zipcar an exclusive contract for public parking spaces in return for certain concessions, like say expanding its reach in underserved areas and keeping prices at reasonable levels. Now, I just have to walk further to pick up a car.