Parking, Fireworks, and Making Sense of Prices

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This week, I’d like to discuss two very different topics: state firework policies and university parking. Although the topics themselves seem to have nothing to do with one another, I think that the price theoretic aspects of these topics have something very important in common. Allow me to set the stage.Perhaps it is different now, but when I lived in Michigan, there was a combination of two laws that really confused me. On the one hand, it was legal to buy and sell fireworks. On the other hand, it was illegal to set off fireworks. Violations were subject to a fine. (In fairness, this isn’t completely true. There were certain days in which one was exempt from fines. I believe that New Year’s, Memorial Day, and Independence Day celebrations were exempt from fines.) It seemed contradictory to allow people to buy and sell fireworks, but that lighting off the fireworks on most days of the year resulted in a fine. Why allow people to buy something and then fine them when they consume it?Another thing that I’ve long found perplexing is the parking situation on university campuses. I’ve spent a lot of years on university campuses and the one thing these campuses have in common is that there never seems to be enough parking to satisfy demand. This is such a problem that universities often have meetings about how to solve the parking problem that involve discussions about whether to build a new parking garage, but rarely about price. One would think if the objective was to solve an excess demand problem, the obvious solution would be to increase the price. Yet, somehow this never c…