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Induced demand and rebound effects in road transport

  • Hymel, Kent M.
  • Small, Kenneth A.
  • Dender, Kurt Van

This paper analyzes aggregate personal motor-vehicle travel within a simultaneous model of aggregate vehicle travel, fleet size, fuel efficiency, and congestion formation. We measure the impacts of driving costs on congestion, and two other well-known feedback effects affecting motor-vehicle travel: its responses to aggregate road capacity ("induced demand") and to driving costs including those caused by fuel-economy improvements ("rebound effect"). We measure these effects using cross-sectional time series data at the level of US states for 1966 through 2004. 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.

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Article provided by Elsevier in its journal Transportation Research Part B: Methodological.

Volume (Year): 44 (2010)
Issue (Month): 10 (December)
Pages: 1220-1241

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Handle: RePEc:eee:transb:v:44:y:2010:i:10:p:1220-1241
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  1. Mannering, Fred L., 1986. "A note on endogenous variables in household vehicle utilization equations," Transportation Research Part B: Methodological, Elsevier, vol. 20(1), pages 1-6, February.
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  9. Paul R. Portney & Ian W.H. Parry & Howard K. Gruenspecht & Winston Harrington, 2003. "Policy Watch: The Economics of Fuel Economy Standards," Journal of Economic Perspectives, American Economic Association, vol. 17(4), pages 203-217, Fall.
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  11. Dargay, Joyce, 2007. "The effect of prices and income on car travel in the UK," Transportation Research Part A: Policy and Practice, Elsevier, vol. 41(10), pages 949-960, December.
  12. Patricia Mokhtarian & Francisco Samaniego & Robert Shumway & Neil Willits, 2002. "Revisiting the notion of induced traffic through a matched-pairs study," Transportation, Springer, vol. 29(2), pages 193-220, May.
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  14. Robert Cervero & Mark Hansen, 2002. "Induced Travel Demand and Induced Road Investment: A Simultaneous Equation Analysis," Journal of Transport Economics and Policy, London School of Economics and University of Bath, vol. 36(3), pages 469-490, September.
  15. Noland, Robert B., 2001. "Relationships between highway capacity and induced vehicle travel," Transportation Research Part A: Policy and Practice, Elsevier, vol. 35(1), pages 47-72, January.
  16. David L. Greene & James R. Kahn & Robert C. Gibson, 1999. "Fuel Economy Rebound Effect for U.S. Household Vehicles," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 1-31.
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