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You can't reduce the demand for going to work or shopping for groceries. Arguably the real problem is we've put too much in too small a space.

No, but it does help incentivize people to do those things using transit, or at non-rush hours and gives less traffic to everyone else.

It doesn't work if there aren't alternatives, of course. But NY and London do have them.

I can not imagine there is a statistically relevant number of people that travel to Manhattan to specifically to grocery shop.