OPTIMAL CONGESTION CHARGES IN GENERAL EQUILIBRIUM

Abstract

This paper deals with pricing and investment decision problems of multi-route and multi-period highway systems in which the congestion is a significant factor in the assessment of system costs. This study approaches this congestion pricing scheme with two different social welfare maximization problems, both of which search for the optimal solutions through general equilibrium analysis. These two optimization problems have an identical structure except financial constraints that reflect different decision environments. One welfare maximization problem involves estimating the first-best social optimal solution. This problem yields the optimal solution for the implementation scheme to impose the differentiated congestion charge for each trip alternative in terms of travel route and trip period. The optimal congestion charge for this problem has the expression similar to that derived in previous studies dealing with congestion pricing. Another maximization problem involves characterizing the second-best optimal solution. In this problem, it is assumed to impose the congestion toll only on a single highway link. This problem yields the second-best congestion toll different from the first-best one. This second-best optimal congestion toll has the structure to reflect its impact on other highway links exempt from the congestion charge program.

Keywords

• Highway service process
• Marginal cost
• Congestion charge
• Investment decision
• Social optimality