Do Ride-Hailing Services Worsen Freeway Congestion and Air Quality? Evidence from Uber's Entry in California

We investigate the effects of Uber's entry into California on freeway traffic and pollution. We use a panel difference-in-differences design and exploit variation in the timing and occurrence of Uber's entry into different counties using hourly freeway traffic data and daily pollution data between 2009 and 2017. We find reductions in weekday freeway congestion and PM2.5 concentration in the average county entered. However, this reduction occurs at off-peak times and in less populated counties. During the evening rush hour and in the most populated counties, we find increases in congestion and air pollution. We estimate that Uber's entry resulted in an overall net congestion cost varying between $1.4 and $13.9 million for counties where and time periods that already experience the highest congestion.