The Fundamental Law of Highway Congestion: Evidence from the US§

We investigate the relationship between interstate highways and highway vehicle-kilometers travelled (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 inflow of new residents; and an increase in transportation intensive production activity. 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 and that the current provision of roads exceeds the optimum given the absence of congestion pricing.

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