Congestion in cities: evidence on the form and causality of the macroscopic fundamental relationship of traffic flow

This paper quantifies the technology driving congestion in urban road networks. To do so, we estimate macroscopic fundamental relationships for homogeneously congested sub-networks (reservoirs) in thirty-four cities worldwide. We adopt a causal approach based on non-parametric instrumental variables to estimate the form of the reservoir-level flow-density relationship using large-scale traffic sensor data. Specifically, we apply a Bayesian non-parametric spline-based regression model with instrumental variables to adjust for potential confounding/endogeneity biases due to simultaneity and omitted variables such as vehicle interactions and traffic controls. Our estimates suggest that the provision of vehicular travel in cities is subject to decreasing returns to density and network size. Importantly, we find that increasing road network capacity is not an efficient solution to manage congestion because average travel speed does not change substantially with increase in capacity. As a by-product of the estimation, we also deliver estimates of important traffic control inputs such as capacity and critical occupancy for these reservoirs. Our results have implications for traffic flow modelling used by both economists and traffic engineers.