Although it's gone mostly unnoticed, the City of Berkeley has overhauled a key city program this holiday season in an attempt to solve a vexing problem that many municipalities face: parking. Earlier this year, the city council approved a significant change to Berkeley's street parking and public parking garages in three commercial districts — downtown, Telegraph Avenue, and the Elmwood. The overhaul also is designed to shift the city's focus away from viewing parking as a revenue-generating enterprise to one that makes shopping easier and provides a boost to small businesses.

Berkeley based its new parking strategy on research conducted by UCLA professor Donald Shoup, who is known among city planners nationwide as the guru of market-based pricing for parking. Shoup notes that parking is like any other commodity — the higher the demand there is for it, the higher the price consumers are willing to pay. It's why private garages in busy downtown San Francisco, where parking is impossible to find on weekdays, often charge $15 or more per hour.

But Shoup's work goes one step further than basic supply-and-demand economics. It's all about setting the right prices for parking so that retailers can be assured of having a steady of stream of customers who can readily find parking. According to Shoup, if there's no parking available in a retail district, that means the price for parking is too low and should be raised to create a disincentive for people to park there all day. By contrast, if there's too much parking available, then the city should lower the price to create an incentive for people to shop.

In other words, it's a mistake to charge the same amount for parking in bustling areas of a city as in less busy ones. According to Shoup, the sweet spot for parking is 85 percent — that is, cities are charging the correct price if 85 percent of the parking spaces are taken at any given time, leaving one to two spots available per block. That way, motorists will be able to find parking when they need it, but there won't be a bunch of empty spots.

Market-based pricing also helps ease traffic and reduce greenhouse gas emissions from cars. "When street parking is full, there's a lot of circling — people don't realize how much traffic is caused by people circling the block, looking for parking," explained Matt Nichols, Berkeley's principal transportation planner. Nichols is a Shoup disciple: Shoup was his advisor at UCLA.

Berkeley devised its new pricing program after collecting data on parking patterns and conducting extensive outreach with small businesses in the three commercial districts, said Willa Ng, project manager of the goBerkeley parking program. The city also has varied the length of time available for parking in certain areas. In the downtown core, for example, street parking now costs $2.25 per hour and is limited to two hours. But in less busy areas near downtown, the price is $1.25 per hour and you can park for up to four hours.

In Elmwood, the city extended street parking to three hours to accommodate moviegoers at the Elmwood Theater. But the city charges more the longer you park to discourage motorists from parking in the area for too long. The first hour costs $1.50, and then it rises to $2 in the second hour, and $2.50 in the third. The price increases also are designed to discourage employees from area businesses from driving to work and taking all the parking.

In the Telegraph area, the city has lowered prices at the public garage on Channing Way, realizing that it's often only half-full. The garage used to cost $2 an hour, but it now it's just a $1 an hour — and the first hour is free. By comparison, the city raised prices at its downtown garages, which are often full on weekdays. It now costs $17 to park in the garages for four hours or more. It's the first time that the city has raised prices at the garages since 2003.

The new program also has buy-in from small businesses. Roland Peterson of the Telegraph Avenue Merchants Association praised the parking overhaul, especially the change in pricing for the Channing garage. He said the city consulted with the merchants in every step of the process. The old pricing scheme charged the same amount for the garage in the struggling Telegraph area as in more bustling commercial districts. As a result, "it was underutilized," Peterson said.

The one area that Berkeley has diverged from Shoup's research is charging for parking from 6 p.m. to 8 p.m. During the restaurant dinner rush, there's often no parking available in the city's commercial districts. Shoup, according to Nichols, has advocated that the city charge for parking during these hours to free up more parking spaces for restaurant patrons — and discourage restaurant employees from taking all the spots. But the city council, Nichols said, is not yet ready to implement that proposal.

San Francisco has also adopted Shoup's market-pricing strategies for parking in certain areas, as has Redwood City. Berkeley is the first East Bay city to do so. The council plans to review the overhaul in March, and the city may tweak pricing and time limits depending on what the data shows. If the program is successful, other cities are expected to follow suit.

But the chances of Oakland adopting the new strategy seem slim at this point. A vocal contingent of business owners has argued loudly that the city should lower parking prices across the board, arguing that there is not enough parking available in some areas, like the Grand-Lake neighborhood. But Shoup's research refutes that argument. If there's no parking available, then the city should raise prices in those areas — not lower them — so as to discourage people from parking there for long periods.

As such, Oakland's decision to offer free parking on Saturdays in December in commercial districts was a mistake for busy retail areas. Free parking just provides an incentive for people to park for long periods — leaving no spots for those who want to shop and support their local small businesses.

Clarification: Oakland's free parking program on Saturdays in December is limited to two hours in commercial districts.