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Second-Best Congestion Pricing in General Networks - Algorithms for Finding Second-Best Optimal Toll Levels and Toll Points

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  • Erik T. Verhoef

    (Vrije Universiteit Amsterdam)

Abstract

This paper considers the second-best problem where not all links of a congested transportation networkcan be tolled. The paper builds on earlier work, in which the second-best tax rule for this problem wasderived for general static networks, so that the solution presented is valid for any graph of the network,and for any set of tolling points available on that network. An algorithm is presented for finding second-best tolls, based on this general solution. A simulation model is used for studying its performance forvarious archetype pricing schemes: a toll-cordon, area licences, parking policies in the city centre, pricingof a single major highway, and pay-lanes and 'free-lanes' on major highways. Furthermore, an exploratoryanalysis is given of a method for selecting the optimal location of toll points in case not all links can betolled.

Suggested Citation

  • Erik T. Verhoef, 2000. "Second-Best Congestion Pricing in General Networks - Algorithms for Finding Second-Best Optimal Toll Levels and Toll Points," Tinbergen Institute Discussion Papers 00-084/3, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20000084
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    References listed on IDEAS

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    Cited by:

    1. Simon Shepherd, 2008. "The effect of complex models of externalities on estimated optimal tolls," Transportation, Springer, vol. 35(4), pages 559-577, July.
    2. Hyman, Geoffrey & Mayhew, Les, 2002. "Optimizing the benefits of urban road user charging," Transport Policy, Elsevier, vol. 9(3), pages 189-207, July.
    3. Verhoef, Erik T., 2002. "Second-best congestion pricing in general static transportation networks with elastic demands," Regional Science and Urban Economics, Elsevier, vol. 32(3), pages 281-310, May.
    4. May, A. D. & Liu, R. & Shepherd, S. P. & Sumalee, A., 2002. "The impact of cordon design on the performance of road pricing schemes," Transport Policy, Elsevier, vol. 9(3), pages 209-220, July.

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