A Game Theoretic Approach to an Upper East Side Parking Space

Under what circumstances should people cooperate when searching for parking? There are a host of smart phone apps designed explicitly to help allocate scarce parking resources among a privileged few drivers. Such apps facilitate cooperation strategies as a form of collective action. As long as the number of participants (people seeking curb parking who subscribe to the apps) is sufficiently small relative to the population (all drivers) the small group cooperating will have an information advantage and have higher levels of success finding parking. Once the number of subscribers grows sufficiently large relative to the overall population the information advantages will diminish and everyone will have to continue to drive around looking for a space. Allocating curb spaces is an economic problem, not an information problem.

It is possible for a very small group to cooperate and take advantage of privileged information. On Manhattan's Upper East Side a pediatrician and food vendor have developed their own club that monopolizes a street space. Here is a Gothanist story about them. From the story:

An Upper East Side pediatrician and a food-cart vendor have been saving a parking spot for one another on East 96th Street for two years, surprising everyone who believes this city is the glorified embodiment of unchecked egotism. The Post reports that when Dr. Doug Waite pulls his Volvo out of the spot at 8 a.m., Sait Kumtas pulls his van in. At 6 p.m., Dr. Waite honks three times and Kumtas relinquishes the spot.
Instead of throwing vast sums of money at the problem of finding a spot, the men agreed to "cooperate" (a term that originated in the Midwest and means "share like suckers") after they happened to make the swap by chance. “He was my customer,” Kumtas says. “I knew him, and we would say hello."
Everything is fine so long as they remember to give each other a heads up when they're going on vacation. “Once, we were up in Maine to visit my son in school and I got a call on my cellphone from Sait, wondering where I was,” Dr. Waite says. And Kumtas didn't even slash his tires or punch him in the face!

The vendor's van is even in the Google Maps street view photo.

So these two realized that cooperation was mutually beneficial. How large can their parking club get before cooperation breaks down? Probably not very large, but what these two are doing with one space on the Upper East Side is essentially what all the smart phones parking apps are trying to do for all parking spaces.

Who Buys Manhattan Apartments?

It makes more sense to rent than own your apartment in Manhattan. Here is more. So who buys? In about 20 percent of cases foreigners buy Manhattan properties. This is good as most of these units are not primary residences. However, foreign cash is likely to continue to push up sales prices and rents. Jonathan Miller put together an interesting series of graphs that highlight the relative value of currencies, and apparently buying with Euros is worth about a 25 percent discount and buying with pounds is worth about a 37 percent discount. To me this suggests that European money will flow into Manhattan real estate (a similar situation is happening in Miami) pushing prices higher. Even if oodles of new units are permitted and built I don't see much potential for rent relief for New Yorkers who want to live in Manhattan or the region. Substantial foreign cash will shift resources from oversees, not from elsewhere in the city. I remain skeptical that lower Manhattan can build it's way out of high rents because of induced demand. If the economy craters, then maybe.

I will be curious to see if foreign buyers start to buy in Brooklyn and Queens at the same rate they do in Manhattan. Are foreign buyers willing to trade transport costs for land costs with their second homes and pied-a-terres?