An article in the Wall Street Journal on the parking problems at Tesla’s Fremont, California, factory noted that “Tesla has tried to encourage alternatives to driving, such as biking, public transportation and the shuttle buses provided from around the Bay Area.”

a. If Tesla auctioned off the right to park in its lot, would the firm need to provide other encouragement for employees to use alternative means of transportation? Briefly explain.

b. Is the most economically efficient allocation of parking spaces in Tesla’s lot likely to result from auctioning off the right to park or from keeping parking free while encouraging employees to use alternative means of getting to work? Briefly explain.

c. Given your answer to part (b), why hasn’t Tesla considered charging employees for parking in its lot?