But is it in the public interest to charge market rate? That's the issue here. Should poorer people in SF be unable to park anywhere? Is that a good use of public resources?
The most important effect is that the incentives that might have favoured innovation to improve the efficiency of the use of the good and offer affordable alternatives are distorted in favour of incentives which favour unscrupulous competition for arbitrage gains.
The status quo is obviously broken. The question is if there is an easy and effective way to improve fairness.
The main issue with designing a reservation based system is how efficient it is with regards to spots being continually filled, along with the constraint that it be considered fair by all participants. It seems like a design challenge but the current greedy algorithm probably sets the bar pretty low. It would be interesting to simulate.