Abstract
A simple theory of traffic flow is developed by replacing individual vehicles with a continuous ''fluid" density and applying an empirical relation between speed and density. Characteristic features of the resulting theory are a simple "graph-shearing" process for following the development of traffic waves in time and the frequent appearance of shock waves. The effect of a traffic signal on traffic streams is studied and found to exhibit a threshold effect wherein the disturbances are minor for light traffic but suddenly build to large values when a critical density is exceeded.