Archive for July 1st, 2014

July 1, 2014

Induced Demand

Induced demand

Price elasticity of demand

Induced demand, or latent demand, refers to the phenomenon that after supply increases, more of a good is consumed. This is entirely consistent with the economic theory of supply and demand; however, the idea has become important in the debate over the expansion of transportation systems, and is often used as an argument against widening roads, such as major commuter roads. It is considered by some to be a contributing factor to urban sprawl.

Latent demand has been recognized by road traffic professionals for many decades. J. J. Leeming, a British road-traffic engineer and county surveyor between 1924 and 1964, described the phenomenon is his 1969 book: ‘Motorways and bypasses generate traffic, that is, produce extra traffic, partly by inducing people to travel who would not otherwise have done so by making the new route more convenient than the old, partly by people who go out of their direct route to enjoy the greater convenience of the new road, and partly by people who use the towns bypassed because they are more convenient for shopping and visits when through traffic has been removed.’

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