Free parking for all in shopping malls

This paper is a first analysis of the shopping mall parking problem. The key to our analysis is recognizing that sometimes shoppers do not find the goods that they want. When this outcome is possible, the mall prefers to provide parking for free and embed the cost of parking in the price of the goods. This result holds if the mall has monopoly power or prices competitively, if we allow for parking validation, or if the mall faces a trade-off between the space devoted to shopping and parking. More importantly, it is also the second-best social optimum. The lot size that the mall chooses is smaller than the socially optimal lot size, yielding a rationale for imposing minimum parking requirements. In urban malls, the parking fee may be positive because individuals can use the mall lot to do other things and lots may be too large or too small because of the trade-off between lot size and shopping space.