If driverless cars eliminated the need for public transport (in the contemporary sense) you could open up rail corridors to create highways for cyclists, joggers, and walkers - it would open up alternatives to motorised travel.

Or you could turn the theory on its head - use the rail corridors as motorised transport arteries and open up the roads to the bipeds.

(From Sydney where the rail network is extensive - I'd imagine places with less ubiquitous rail wouldn't benefit as much)

I would think the reverse. Why own a car if you can get a taxi at your door in the size/shape/color of your choice whenever you need one without having to pay for the taxi driver?

A taxi is a car.

You are right, but I am, too :-). In my mind, a taxi also is public transportation. I do not think I am alone in that. Wikipedia disagrees with it in http://en.wikipedia.org/wiki/Public_transport ("as distinct from modes such as taxicab"), but http://en.wikipedia.org/wiki/Taxicab talks of "modes of public transport" for taxicabs. I guess the terminology will become more confused if/when driverless cars become commonplace.