Abstract:We investigate how parking fee and parking supply can be designed to mitigate traffic congestion, and to reduce total social costs. Vickrey’s morning commute model is extended to incorporate travelers’ choices between two parking areas (clusters). We first derive the travel patterns under different parking capacities, parking fees and accessibility to the destination; then perform a sensitivity analysis to reveal the effect of each factor on network performance and travel profiles. Some interesting findings are: (1) enlarging the central parking lots is not always desirable; (2) parking fee and capacity should be set in a way that commuters prefer to park in the farther area during early arrival; and (3) a shorter access time always reduces the social costs. Finally, we derive the optimal parking fees, capacities and access times which altogether yield the minimum total social costs. When the closer parking cluster does not have too large an accessibility advantage over the farther one, the optimal travel profile is such that both parking clusters are utilized. As a result, the optimal parking solution can effectively reduce both the social costs and the queuing delay. Even more intriguing is that, compared to the case without parking choices, all travelers are better off under the optimal parking solution, which cannot be achieved by only imposing a system-optimal dynamic toll.