Cheap subsidized fuel supplied to transportation section has the most impact on traffic jam and air pollution in the Iranian megacities, especially Tehran. The 5th Five-Year Development Plan of the country aims at elimination of energy subsidies. Accordingly, this study examines the effects of the increase in the price of energy carriers in two different scenarios on megacities’ traffic and the corresponding variables. A system dynamics model is first designed to identify the most effective variables on traffic and urban transportation. The model considers an increase in the price of energy carriers based on the world price trends, until 2014 (the final year of the Subsidy Targeting Program), and evaluates the its impact on the relevant variables. The results reveal a short time reduction in transportation traffic volume. However, due to incremental trends in demand and production of vehicles, it returns to its first state.

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