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Induced Demand: A Microscopic Perspective


  • Pavithra Parthasarathi

    (URS, 700 Thresher Square, Third Street South, Minneapolis, MN 55415, USA,

  • David M. Levinson

    (Department of Civil Engineering, University of Minnesota, 500 Pillsbury Drive SE, Minneapolis, MN 55455, USA, Levin031

  • Ramachandra Karamalaputi

    (CTPS, 10 Park Plaza, Suite 2150, Boston, MA 02116, USA, knvrama@


This paper analyses the induced demand hypothesis using a disaggregate approach at the link level. A panel data-set of Minneapolis-Saint Paul highway network for the years 1980-98 is constructed. A model that predicts the traffic flow on the link in terms of vehicle kilometres travelled (VKT) based on the flow and capacity conditions existing on the link in the previous years is specified and estimated. The flow and capacity conditions existing on the identified neighbouring parallel links are also taken into account. Socio-demographic characteristics like population of the Minor Civil Division (MCD) to which the link belongs and the surrounding MCDs are also considered. The results indicate that capacity enhancements in the previous years, given by lane additions, have a positive and significant effect on the VKT of the link, confirming the induced demand hypothesis. The elasticities are lower than reported in previous research, indicating the importance of separating new construction from the expansion of existing links.

Suggested Citation

  • Pavithra Parthasarathi & David M. Levinson & Ramachandra Karamalaputi, 2003. "Induced Demand: A Microscopic Perspective," Urban Studies, Urban Studies Journal Limited, vol. 40(7), pages 1335-1351, June.
  • Handle: RePEc:sae:urbstu:v:40:y:2003:i:7:p:1335-1351

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    References listed on IDEAS

    1. 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.
    2. 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.
    3. David Levinson & Seshasai Kanchi, 2002. "Road Capacity and the Allocation of Time," Working Papers 200203, University of Minnesota: Nexus Research Group.
    4. David Levinson & Ajay Kumar, 1994. "The Rational Locator: Why Travel Times Have Remained Stable," Working Papers 199402, University of Minnesota: Nexus Research Group.
    5. Hansen, Mark & Huang, Yuanlin, 1997. "Road supply and traffic in California urban areas," Transportation Research Part A: Policy and Practice, Elsevier, vol. 31(3), pages 205-218, May.
    6. David Levinson & Ajay Kumar, 1994. "Integrating Feedback into the Transportation Planning Mode," Working Papers 199404, University of Minnesota: Nexus Research Group.
    7. Hansen, Mark, 1995. "Do New Highways Generate Traffic?," University of California Transportation Center, Working Papers qt3rj612zh, University of California Transportation Center.
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    Cited by:

    1. David Levinson & Ramachandra Karamalaputi, 2003. "Predicting the Construction of New Highway Links," Working Papers 200305, University of Minnesota: Nexus Research Group.
    2. Shanjiang Zhu & David Levinson & Henry Liu, 2017. "Measuring winners and losers from the new I-35W Mississippi River Bridge," Transportation, Springer, vol. 44(5), pages 905-918, September.
    3. Nikolas Geroliminis & David Levinson, 2008. "Cordon pricing consistent with the physics of overcrowding," Working Papers 000038, University of Minnesota: Nexus Research Group.
    4. David Levinson, 2008. "Density and dispersion: the co-development of land use and rail in London," Journal of Economic Geography, Oxford University Press, vol. 8(1), pages 55-77, January.
    5. Martin, Juan Carlos & García-Palomares, Juan Carlos & Gutierrez, Javier & Román, Concepción, 2010. "Efficiency and equity of orbital motorways in Madrid," The Journal of Transport and Land Use, Center for Transportation Studies, University of Minnesota, vol. 3(1), pages 67-84.
    6. David Levinson & Ramachandra Karamalaputi, 2003. "Induced Supply: A Model of Highway Network Expansion at the Microscopic Level," Journal of Transport Economics and Policy, University of Bath, vol. 37(3), pages 297-318, September.
    7. David Levinson, 2004. "The Evolution of Transport Networks," Working Papers 200510, University of Minnesota: Nexus Research Group.

    More about this item

    JEL classification:

    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise
    • R42 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government and Private Investment Analysis; Road Maintenance; Transportation Planning
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes


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