Dedicated bus lanes, bus speed and traffic congestion in Rome

Buses are the mainstay of public transport systems in many cities but are typically subject to significant delays due to traffic congestion. We examine the welfare effects of providing dedicated bus lanes in the city of Rome, Italy. We demonstrate that a dedicated bus lane reduces bus travel time by about 18 percent. Our welfare analysis focuses on the situation where mixed road lanes are turned into dedicated bus lanes. We find that bus lanes are undersupplied, despite the additional time costs due to reducing road capacity available to cars.