Space Wars — Finding an economically efficient allocation of street space across different transport modes

This paper analyzes how street space should be allocated across cars, buses, bicycles, and parking in order to maximize economic efficiency, i.e. the aggregate economic well-being of all the people who use a city’s transport system minus the public funds required to run this system. Accordingly, we set up a nested logit model reflecting differences between users, how congestion in one mode affects others, and how travel demand responds to changes in prices and travel times. Simulations are conducted for Berlin, Germany and New York City, USA. We find that re-allocating street space from cars to buses and especially bicycles improves efficiency. Effect magnitudes and the extent of optimal re-allocations vary between cities. We also shed light on the channels through which re-allocations impact on efficiency. • Street space re-allocations can improve economic efficiency of the transport system. • Efficiency increases when re-allocating street space from cars to buses and bicycles. • Simulations for Berlin and New York City indicate city-specific effect differences.