Second-Best Congestion Pricing in General Static Transportation Networks with Elastic Demand

This paper studies the second-best problem where not all links of a congested transportation network can be tolled. The second-best tax rule for this problem is derived 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. It is demonstrated that the solution obtained indeed generalizes a number of known second-best tax rules presented earlier in the literature, for specific cases of the general problem discussed in the present paper. Finally, it is demonstrated that, for instance by using the concept of 'virtual links', the analysis can be applied rather easily also to a broader class of second-best problems in static networks.