A commonly used strategy to improve bus operations is to dedicate a lane for bus use only. However, this can reduce the available capacity for non-transit modes, in return increasing their delays and potentially creating queue spillovers. This paper proposes a bi-level optimization algorithm to determine dedicated bus lane locations on a network to reduce the total travel time of all network users while considering traffic dynamics. The proposed algorithm is applied to nine scenarios with different demand levels, demand patterns, bus routes, and base modal split values. The results show that, as expected, the implementation of bus lanes often increases car delay. However, the results also show that a net benefit in terms of total passenger travel time can be achieved by implementing bus lanes at strategic locations. The bus lane locations found as a result of the optimization process largely depend on the demand pattern, demand level, bus routes, and base modal split values. For an under-saturated demand scenario, the best performing solution finds that bus lanes should be implemented on almost all bus routes. For saturated and congested demand scenarios, links in the congested parts of the network are avoided in the best performing solution. However, the result of the sensitivity analysis shows that implementing bus lanes on links in the congested parts of the network can also be beneficial in certain scenarios.
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