If there is no parking space overall car ownership cost will adjust very quickly, especially in a city where I am sure police does not take lightly to illegal parking... (and you probably need some form of official authorisation to build more parking spaces...)
I think some places regulate car numbers by requiring proof of parking space in order to buy a car (some towns in China?).
This is not a criticism. They decided to limit cars and to limit them through tax.
Good point. Since cars aren’t driven 24-7, every purchase likely already has a known space available, limiting the negative effects of parked cars.
This doesn’t take into account shared spaces (where one car is parked while another drives), which might be more common in such a space-limited area? Just a guess.
Either way, a parked car is still a waste of space. A fee can help make more space available for humans rather than metal. (Assuming the fee rises above the natural cost of parking)
During this period of rising costs, cars will be overbought (in relation to the parking and driving space available).
As car numbers increase, traffic congestion increases. (This is a time cost)
As congestion increases, cars will be sold or parked in favor of public transportation.
Selling a car in such conditions will be difficult and probably result in net loss.
This means more cars will be kept parked and unused. (This is a space cost)
All the while, traffic will still be bad. And now there are more cars in the city than can be driven or sold.
A fee can prevent these time and space costs, effectively turning them into upfront monetary costs.