Economic Mechanisms for cities with Self-Driving Cars

The adverse affects of free/low-cost parking in cities are well documented in the transportation literature, but there is serious political opposition to correcting these mechanisms. This lesson suggests that it's important to get the mechanisms right on the first try when personal autonomous vehicles appear, since that will be the time where setting the mechanism is most feasible. It is easy to see that the current design of cities will have serious deficiencies in the face of self-driving cars. For instance, nobody will ever send their car to a parking garage which charges $20 dollars for four hours if they can simply tell their car to drive around New York. Of course, this comes with serious externalities (pollution in the city, congestion), which the owner of the car currently does not have to pay.

In our paper, we investigate a variety of mechanisms which cities could implement in order to lower congestion and pollution. We then take the example of New York and see what the city might look like with some of these mechanisms.

The paper can be found here. Our simulation can be found here.