Using data from the 545 largest European cities, we studywhether the expansion of their highway capacity provides a solutionto the problem of traffic congestion. Our results confirm that in thelong run, and in line with the ’fundamental law of highway congestion’,the expansion in cities of lane kilometers causes an increase invehicle traffic that does not solve urban congestion. We disentanglethe increase in traffic due to the increases in coverage and in capacity.We further introduce road pricing andpublic transit policies in orderto test whether they moderate congestion. Our findings confirm thatthe induced demand is considerably smaller in cities with road pricingschemes, and that congestion decreases with the expansion of publictransportation
