Sequential auction based parking space sharing and pricing mechanism in the era of sharing economy

Abstract

Purpose: The purpose of this paper is to design a parking space management platform to alleviate the parking problem and a two-stage solution for sharing and allocating parking spaces.

Design/methodology/approach: The market design mechanism and auction mechanism are integrated to solve the problem of parking space sharing and allocation. In the first stage, the market design mechanism with two rules is applied for making the good use of idle parking spaces. In the second stage, two sequential auction mechanisms are designed by extending first/second-price sealed bid auction mechanism to allocate both private and public parking spaces, which are received in previous stage and owned by the platform. Two stages are connected through a forecasted price which is calculated through the exponential smoothing method.

Findings: First, we prove three important properties of the proposed sequential auction mechanisms, namely, incentive compatibility, revenue equivalence and individual rationality. Second, a simulation study is used to verify the effectiveness of the mechanisms through numerical analysis. The impact of the system on three parts, namely, agents (private parking space suppliers), bidders (parking space customers) and the platform, is examined. Third, the results show that the sharing mechanism with monetrary incentive will attract a number of agents to join in the platform. The bidders are also able to obtain considerable utility, as compared with the (average) market parking fees. The platform can thus effectively allocate parking spaces with reasonable prices.

Originality/value: This paper combines the classical sequential auction mechanisms with the market design mechanism for the parking space sharing and allocation problem. The modeling and analysis method can also be used to address the similar allocation and pricing problems of other resources like bicycle sharing.