PDF: 1832 KB - Bureau of Infrastructure, Transport and Regional ...


PDF: 1832 KB - Bureau of Infrastructure, Transport and Regional ...

Chapter 2 | Prevailing strategies to manage congestion

is perceived as ‘self-defeating’, then for better or worse, this can push policy towards

congestion-charging strategies, whether or not they are appropriate.

This section examines the issue of induced travel and its relevance for road policy.

Concern with this traffic is such that policy makers sometimes seek to arrest the

apparent generation. Thus, we assess the linked concept of policies of ‘locking in the

benefits’ of capacity expansion. Here, policy makers employ strategies to suppress

traffic in order to prevent recurrence of congestion from people using expanded

road facilities.

Theoretical underpinnings

In transport literature, the term ‘induced travel’ is usually given negative

connotations. 20 This association is unfortunate: travel is normally a derived

demand—a consumption that is undertaken in order to enjoy pleasurable and

beneficial activities. Affordable mobility is a central part of lifestyles. Separation of

the home and work environment ensure that we are no longer obliged to ‘live above

the shop’. Children can attend more distant schools that best suit their learning

styles and interests. A wide array of goods is available to purchase, sourced from

around the world at competitive prices. Friendship groups are wider, liberating

individuals from marrying ‘within

the valley’. Practical and affordable

mobility is also a vital part of labour

market flexibility; such flexibility

delivers higher economic productivity

and lower inflation.

Travel is a normal economic good,

being the conduit for society to engage

in productive activities and pleasurable


Travel is thus a normal economic ‘good’,

in being a desirable (direct and derived)

activity, so that more will be demanded when the price falls. The price of travel—the

‘generalised cost of travel’, to use the economic term—includes both monetary costs

(costs of owning and operating a car, tolls and other out-of-pocket expenses) and the

time costs involved with travel.

When capacity is expanded congestion is reduced and the time cost of travel declines,

leading to a decline in the generalised cost of travel. In response, demand for travel

will increase, as is illustrated by Figure 2.7. The vertical axis represents the generalised

cost of travel—an amalgam of the component costs, including time. An increase in

capacity due to infrastructure expansion is represented by the outward shift of the

supply curve (Supply 1

to Supply 2


In conjunction with a downward-sloping demand curve 21 , this translates into a ‘price’

fall from GC 1

to GC 2


As a normal good, a fall in price will lead to an increase in demand—in this case, a

shift in quantity of road travel ‘consumed’ from Q 1

to Q 2

. 22

20. Indeed, greenhouse concerns mean that road travel and other forms of consumption are increasingly regarded as


21. If the demand curve was ‘flat’, rather than downward sloping, there would be no change in price but the quantity

consumed would still increase. Such a demand curve is ‘perfectly elastic’. For background, see, for example,


22. Note that a ‘virtual capacity increase’ achieved by shifting, say, some road users onto rail, would be represented by a

contraction in demand. The demand curve would shift left and the result would be the same—the price would fall.


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