EARLIER this year, in ‘Ch. Sabir Ali vs CDG and others’, the Lahore High Court observed that the allocation of parking spaces was a serious issue in Lahore. In a detailed judgement, the court directed the Lahore Parking Company (LPC) to devise a comprehensive parking policy that “addresses the scarcity of parking spaces” throughout the city.

Strange as it may sound, an effective parking policy must take property law as its starting point and then proceed by analysing how different rules of allocating property might be suitable for different city areas. After all, a road or any other public space is a form of commons ie common property under state ownership. The government can regulate the commons in many ways which includes designating some spaces as no-parking zones and preventing heavy trucks from entering the city until late at night. As all property owners, the government is also entitled to generate income from its asset. This is why government collection of parking fee is justified and never taken to be an unreasonable exaction.

In traditional scholarship, the right to property represents a bundle of rights including ownership, use, possession, income etc. An owner of property is said to be entitled to the bundle of rights that accompany such ownership. Depending on the type of property however this bundle can be split up in order to maximise overall utility eg, in renting out a house, the owner retains ownership and the right to generate an income (rent) from the asset but gives up possession in favour of the tenant.

The same goes for parking on roads and other public spaces. While the government retains ownership, it splits up the right to use and possession from the rest of the bundle and distributes them to the public based on the rule of first possession. Under this rule, whoever finds an empty parking space first is entitled to park his vehicle till such time that he is not dispossessed by another. The person who parks acquires a user interest in the parking space.

Demand for parking spaces in Lahore often exceeds the supply.

This is the predominant method of allocating property (ie a right to use) in a parking space and LPC should adopt this as a default rule under the new parking policy. In a paper for the Coase-Sandor Institute of Law and Economics, University of Chicago, Richard Epstein explains why it’s intuitively appealing: “The simple first possession rule, giving a right of use only … does not carry with it any odd distributional consequences. Every driver has multiple plays in the parking game. No one identifies himself as a systematic early or late arrival on the public roads. The rule therefore that optimises the use of the road probably works to the advantage of all individuals”.

But the simple version of this rule loses its appeal in areas where demand for parking spaces exceeds the supply and intensity of use is high, as is the case in many areas of Lahore. In such areas, LPC may introduce a metering system instead because there parking space is too valuable to be offered on a first-come, first-served basis for as long as the user wishes to park. Metering allows the property allocation to be rationed by price and time. Shorter times, for instance, can be set for parking spaces near important business centres across the city: a two-hour parking limit next to a shopping centre forces buyers to get done with their purchases quickly. This increases customer turnover, allowing a greater volume of trade to take place.

Metering, however, will raise policing and enforcement costs for LPC. Its effective implementation re­quires investing in an enforcement machinery failing which the true gains from a metering system cannot be realised. Incur­ring greater administrative expense can be justified nonetheless where the underlying resource is limited and an alternative regime of property can allocate user rights more efficiently.

LPC may use the same logic to introduce permits in residential neighbourhoods where rights are assigned to local residents who meet certain residential qualifications. Alternatively, permits may also be allocated by way of annual auctions particularly in areas frequented by the same users, eg Fane Road where the parking space is utilised by the same lawyers who visit the Lahore High Court each day. Though auctioning off parking spaces generates spillover effects and increases congestion on adjoining roads, it also helps generate government revenues that can be used to provide better spaces elsewhere in the city.

In any case, an effective parking policy — be it for Lahore or any other city — should incorporate all these allocative mechanisms which requires policymakers in Pakistan to first develop an understanding of the economics of selecting one property rule over another.

The writer is a lawyer.

Published in Dawn, November 23rd, 2017