🔗 Induced Demand Is Real

🔗 Economics

Induced demand – related to latent demand and generated demand – is the phenomenon that after supply increases, price declines and more of a good is consumed. This is entirely consistent with the economic theory of supply and demand; however, this idea has become important in the debate over the expansion of transportation systems, and is often used as an argument against increasing roadway traffic capacity as a cure for congestion. This phenomenon, more correctly called "induced traffic" or consumption of road capacity, may be a contributing factor to urban sprawl. City planner Jeff Speck has called induced demand "the great intellectual black hole in city planning, the one professional certainty that everyone thoughtful seems to acknowledge, yet almost no one is willing to act upon."

The inverse effect, or reduced demand, is also observed (see § Reduced demand).