An Economics Approach to Fixing the Fare of the Parking Lot Service in Bogotá Using Price Cap Regulation
Journal of Cost Analysis and Parametrics
This article presents an application of the Ramsey Pricing approach to establish the price cap or pricing ceiling per minute for the parking lot service in Bogota (Colombia), using the microeconomic framework for price fixing from a costs analysis (total fixed costs, total variables costs, average total cost, and marginal cost) of the provision of parking lot service in Bogota. These results were evidenced by means of a dynamic panel data model for estimating total cost functions through generalized method of moments estimators. Also, from the econometric outcome and using the Ramsey Pricing approach and mathematical optimization (comparative statics), I obtained the maximum fare per minute that should pay the consumers of the parking lot service in Bogota. I conclude that the current maximum fee per minute, paid by parking users, does not cover the fixed costs incurred by firms that provide legally this service in Bogota.
Jorge A. Perdomo is the General Director and Deputy Director of Quantitative Analysis at Teknidata Consultants, Carrera 18 No. 86A-14, Bogota, Colombia; Professor of Econometrics II, Principles of Mathematics and Transportation Economics at the Department of Economics of the University of the Andes; and Professor of Applied Microeconomics to Projects at the Faculty of Economics, University of Rosario.