Traffic, Road Expansion, and Supply and Demand
It’s commonly thought that transportation expansion, specifically by expanding roads, provides economic benefit to the area in question. It seems simple that expanding infrastructure will not only create a demand for labor and put consumers to work, but it should also alleviate traffic problems that lead to a slew of additional economic problems such as motor accidents and property damage. However, a recent study in part from UC Davis suggests the opposite effect arises from road expansion.
Their argument is similarly simple and straightforward. Creating additional roads will decrease traffic time, which will decrease the indirect cost of travel. This is also known as the opportunity cost, or the next best alternative that was foregone by spending time traveling. Thus, as the price of travel decreases, the quantity of driving demanded will increase, often termed induced driving. As induced driving takes over, the effect of the expanded road will be reduced, and traffic will likely settle on an equilibrium point that was worse than prior to the expansion.
In ECON 2040 Networks, we observed that upon the addition of a new road, commuters will abandon their old routes for the new route until the two routes are equivalent in travel times. This point is known as equilibrium, and can be thought of as the point at which the supply of travel and the demand for travel intersect. However, it is possible that this model is not applicable in the real world because it assumes a finite number of travelers. In the real world, it seems to be that additional roads cause additional drivers to enter the market, causing travel time to increase across the board, ultimately settling at a higher equilibrium travel time for all routes involved. If this is the case, this model should be expanded to account for shifts in the size of the driving market that result from changes in supply of travel and demand in travel.
http://www.sfweekly.com/thesnitch/2015/11/18/caltrans-admits-more-roads-mean-more-traffic-and-your-commute-will-be-hell-for-all-eternity