In economics, the Jevons paradox occurs when technological progress increases the efficiency with which a resource is used, but the falling cost of use induces increases in demand enough that resource use is increased, rather than reduced. Governments typically assume that efficiency gains will lower resource consumption, ignoring the possibility of the paradox arising.
Coal-burning factories in 19th-century Manchester, England. Improved technology allowed coal to fuel the Industrial Revolution, greatly increasing the consumption of coal.
William Stanley Jevons, after whom the effect is named
In economics, induced demand – related to latent demand and generated demand – is the phenomenon whereby an increase in supply results in a decline in price and an increase in consumption. In other words, as a good or service becomes more readily available and mass produced, its price goes down and consumers are more likely to buy it, meaning that the quantity demanded subsequently increases. This is consistent with the economic model of supply and demand.
Part of the Embarcadero Freeway in San Francisco being torn down in 1991. The removal of the freeway illustrates the inverse of induced demand, "reduced demand".
A pedestrian plaza on Broadway at Madison Square; the Empire State Building is in the background; Broadway is reduced at this spot to a single lane (on the right)
