We investigate the relationship between interstate highways and highway vehicle kilometers traveled (VKT) in US cities. We find that VKT increases proportionately to highways and identify three important sources for this extra VKT: an increase in driving by current residents; an increase in transportation intensive production activity; and an inflow of new residents. The provision of public transportation has no impact on VKT. We also estimate the aggregate city level demand for VKT and find it to be very elastic. We conclude that an increased provision of roads or public transit is unlikely to relieve congestion.Generated Traffic and Induced Travel - Implications for Transport Planning (PDF)
Results show that congestion affects the demand for driving negatively, as expected, and more strongly when incomes are higher. We decompose induced demand into effects from increasing overall accessibility of destinations and those from increasing urban capacity, finding the two elasticities close in magnitude and totaling about 0.16, somewhat smaller than most previous estimates. We confirm previous findings that the magnitude of the rebound effect decreases with income and increases with fuel cost, and find also that it increases with the level of congestion.The idea of 'induced demand' is that more of something will mean that more gets used. Induced Demand (PDF) :
To an economist, this is an example of demand elasticity. Simply recognizing that travel demand is elastic, however, is not sufficient to reconcile the conflicting views of engineers, planners, and environmentalists. On one side are those who argue that transportation facilities are provided to serve land uses and support economic activity; on the other are those who claim that whatever capacity is provided soon fills up to the
same level of congestion, gaining nothing. The truth can be better understood by defining induced demand in a way that uses the concept of elasticity.
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