A capacity paradox in network design and how to avoid it

The network design problem is often alluded to in the transportation literature together with the spectacular example of Braess paradox, which tells us that creating a new link in a congested network or adding capacity to an existing link may actually increase network-wide congestion or user travel costs. In this note we introduce a new paradox pertaining to network design problems. Using a simple network example, we demonstrate that the addition of a new road segment to a road network may actually reduce the potential capacity of the network. We then show how this capacity paradox can be avoided by introducing the concept of network reserve capacity into network design problems.