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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.

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Bibliographic Info

Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 00-084/3.

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Date of creation: 23 Oct 2000
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Handle: RePEc:dgr:uvatin:20000084

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Web page: http://www.tinbergen.nl

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References

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  1. Verhoef, E.T. & Small, K.A., 1999. "Product Differentiation on Roads Second-Best Congestion Pricing with Heterogeneity under Public and Private Ownership," Papers 99-00-01, California Irvine - School of Social Sciences.
  2. Yan, Hai & Lam, William H. K., 1996. "Optimal road tolls under conditions of queueing and congestion," Transportation Research Part A: Policy and Practice, Elsevier, vol. 30(5), pages 319-332, September.
  3. AndrÊ de Palma & Robin Lindsey, 2000. "Private toll roads: Competition under various ownership regimes," The Annals of Regional Science, Springer, vol. 34(1), pages 13-35.
  4. Braid, Ralph M., 1996. "Peak-Load Pricing of a Transportation Route with an Unpriced Substitute," Journal of Urban Economics, Elsevier, vol. 40(2), pages 179-197, September.
  5. Liu, Louie Nan & McDonald, John F., 1999. "Economic efficiency of second-best congestion pricing schemes in urban highway systems," Transportation Research Part B: Methodological, Elsevier, vol. 33(3), pages 157-188, April.
  6. Glazer, Amihai & Niskanen, Esko, 2001. "Parking fees and congestion," University of California Transportation Center, Working Papers qt9h51t02k, University of California Transportation Center.
  7. May, A. D. & Milne, D. S., 2000. "Effects of alternative road pricing systems on network performance," Transportation Research Part A: Policy and Practice, Elsevier, vol. 34(6), pages 407-436, August.
  8. Richard Arnott & Andre de Palma & Robin Lindsey, 1985. "Economics of a Bottleneck," Working Papers 636, Queen's University, Department of Economics.
  9. Verhoef Erik T., 1997. "Externalities," Serie Research Memoranda 0031, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
  10. Erik Teodoor Verhoef, 1998. "Time, speeds, flows and densities in static models of road traffic congestion and congestion pricing," ERSA conference papers ersa98p156, European Regional Science Association.
  11. Liu, Louie Nan & McDonald, John F., 1998. "Efficient Congestion Tolls in the Presence of Unpriced Congestion: A Peak and Off-Peak Simulation Model," Journal of Urban Economics, Elsevier, vol. 44(3), pages 352-366, November.
  12. Small, Kenneth A. & Gomez-Ilbanez, Jose A., 1998. "Road Pricing for Congestion Management: The Transition from Theory to Policy," University of California Transportation Center, Working Papers qt8kk909p1, University of California Transportation Center.
  13. de PALMA, André & NESTEROV, Yurii, 1998. "Optimization formulations and static equilibrium in congested transportation networks," CORE Discussion Papers 1998061, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  14. 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.
  15. Vickrey, William S, 1969. "Congestion Theory and Transport Investment," American Economic Review, American Economic Association, vol. 59(2), pages 251-60, May.
  16. Braid, Ralph M., 1989. "Uniform versus peak-load pricing of a bottleneck with elastic demand," Journal of Urban Economics, Elsevier, vol. 26(3), pages 320-327, November.
  17. Verhoef, Erik & Nijkamp, Peter & Rietveld, Piet, 1996. "Second-Best Congestion Pricing: The Case of an Untolled Alternative," Journal of Urban Economics, Elsevier, vol. 40(3), pages 279-302, November.
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