The Arkansas State University Parking Garage

Abstract

This paper presents a case study based on a regional university’s decision to resolve a longstanding parking problem by constructing a parking garage.  Although the garage was expected to generate an annual profit, usage of the garage and, accordingly, its revenues, fell well below expectations.  The case analysis incorporates discussions of sunk costs, consumer choice theory, relevant revenues and costs, price elasticity of demand, market entry, and the use of the pricing mechanism to allocate scarce supply.