Abstract
Despite substantial investments in transportation infrastructures, road congestion in urban areas has not abated. While there is a growing interest among policymakers in intelligent transportation systems (ITS), the role of ITS in road congestion has not been established. To investigate the effect of ITS on road congestion, we utilized a unique dataset on traffic and ITS adoption from 99 U.S. urban areas in 2001-2008. The results from fixed-effects estimations show that ITS adoption reduces road congestion, saving an average driver 98 minutes of driving time and $38 per year. We also obtained preliminary evidence that ITS reduces carbon emissions by alleviating road congestion. Our findings extend the emerging IS literature on IT value in the public sector and the societal impacts of IT. Our study also contributes to the transportation economics literature and informs transportation policymakers by showing that ITS could be a cost-effective alternative to tackle road congestion.