Induced motor vehicle travel from improved fuel efficiency and road expansion

This paper investigates the impact of improved fuel efficiency and road network expansion on motor vehicle travel using a system dynamic panel data estimator and panel data at the state level for the 2001–2008 period. Our model accounts for endogenous changes in fuel efficiency, congestion, fuel cost per mile, and vehicle stock. Our regression results suggest that the short run rebound effect is 0.0276 while the long run rebound effect is 0.11. The short run effect of road capacity per capita is 0.066 while the long run effect is 0.26.

► We estimate two effects: the rebound effect and induced travel effect at the state level.
► System dynamic panel data approach is used to address endogeneity issue.
► In the period of 2001–2008, the rebound effect is 0.0276 in the short run and 0.11 in the long run.
► Increase in road capacity induces motor vehicle travel.
► Induced travel effect is 0. 0.066 in the short run and 0.26 in the long run.