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Adding capacity is one policy mechanism to alleviate congestion. However, the empirical evidence strongly suggests that additional capacity only makes congestion worse. This study analyzes the differential effects of additional freeway capacity versus additional arterial capacity on vehicle kilometers of travel (VKT) in metropolitan areas across the U.S. The analysis uses vehicle data and household data from the 2001 and the 2009 National Household Travel Surveys (NHTS) and includes stock and flow measures of road capacity, road congestion, commuter demand, and economic growth for metropolitan areas. Taking into account differences between metropolitan areas on each measure, the study adopts a novel multilevel model approach to estimate how additional capacity affects VKT. Results indicate that adding more arterial capacity slightly decreases VKT over a lag period from six years (1995 to 2001) to eight years (2001 to 2009), probably because adding arterials shortens routes between origins and destinations more so than adding freeways. Consistent with expectations, VKT is lower in more congested metropolitan areas, and in metropolitan areas that got more congested. Results also indicate that rebound effects (higher fuel-economy vehicles are driven much more than lower fuel-economy vehicles) will at least partially offset the demand management benefits of (gasoline) price sensitivity (higher gasoline prices decrease VKT). [ABSTRACT FROM AUTHOR]