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• The San Francisco Parking case (available for purchase at https://hbsp.harvard.edu/import/1216638) will require you to use your knowledge of markets, public goods, negative externalities such as congestion, and economic efficiency.

• You may work in groups of up to (but no more than) 4. Each group submits a single paper. You may not discuss the case with members of other groups.

• The paper should not be more than 5 pages (double-spaced, size 11 font or larger). Supporting figures may be placed in an appendix that does not count towards the page limit. You will not receive credit for anything on or beyond page 6. Clarity and conciseness are important for all types of professional writing, not just economics.

• Write a policy memo to me as if I am a San Francisco city legislator (not of a particular party or interest group, but someone who cares for the greater good) and need to better understand the three proposals discussed in the case. Assume that legality is not an issue; San Francisco can legally charge whatever price it wants for residential and metered parking and can impose whatever standards it wants in regards to off-street parking. (After all, this is an economics class, not a law class!) You need only read the case; no outside research is necessary.

• You can assume that I (the legislator to whom you are writing) know some basic economic principles. For instance, I am familiar with the supply and demand model. But you are not writing this memo to your economics professor. For instance, when you cite one of your figures you cannot simply write “free parking creates deadweight loss, as seen in Figure X.” You need to explain what the figures shows, not just assert that it shows something.

• Your memo should include four sections. Please stick to this four-section structure to ensure that your response to each part of the case is obvious.

1. [2 points] A brief statement of the problem and some background. One or two paragraphs are sufficient.

2. [4 points] The general economic rationale behind charging for parking. You should discuss the costs of parking in general, including the importance of the distinction between private and social costs. You do not have to discuss the specific rationales and costs for metered vs. residential vs. off-street parking (that will come in the next two sections). Besides addressing the general rationale for a price greater than zero, you should also discuss how the magnitude of the price should be determined and why that “optimal” price may vary from one setting to another.

3. [9 points] Discussion of the pros and cons and each of the three proposals mentioned in the case.

This is where you can get into more detail about different types of parking (as opposed to the more general discussion in section 2). a. [3 points] Metered street parking. What are the private vs. social costs associated with metered street parking? What are the pros and cons of the proposal described in the case?

b. [3 points] Permitted, residential street parking. What are the private vs. social costs associated with residential street parking? What are the pros and cons of the proposal described in the case?

c. [3 points] Zoning requirements for off-street parking. What are the private vs. social costs associated with off-street parking? What are the pros and cons of the proposal described in the case?

Your job in this section is to inform. Each proposal has both pros and cons that you should discuss. You will have the opportunity to express your judgement and opinions in the next section.

4. [3 points] A recommendation for each of the three proposed reforms that is clearly based on your discussion of the pros and cons. Your recommendation could be to stick with the status quo, enact the proposed reform described in the case, or enact some alternative proposal that you invent. There are no “right” or “wrong” answers here. I instead care about whether your recommendations make sense in the context of your previous discussion of the pros and cons. [1point for each of the three proposals.]

• [3 points] You must include a diagram that illuminates your discussion of the general economic rationale behind charging for parking in section 2. The figure should illustrate the difference between the status quo and efficient amounts of parking, and the resulting deadweight loss. You should feel free (but are not required) to include other diagrams related to sections 3 and 4 if you think they will help get your point across. These figures can be included in an appendix that does not count towards the 5-page maximum. Any figures that you include (including the required one) should be well labelled and discussed in your memo text. Feel free to draw these figures by hand if it will save you some time; just make sure that the figures are clear and all labelling is legible.

• [4 points] Most of your grade will depend on the quality of your answers to prompts 1-4. An additional 4 points are devoted to the general quality of your writing. Be sure to edit and revise.