Static Versus Demand-Sensitive Models and Estimation of Second–Best Cordon Tolls: An Exercise for Eight English Towns

The static economic model of traffic congestion suggests that external costs can be internalized, with link-specific congestion charges equal to the externality at the efficient level of traffic. Such a scheme remains theoretical. Feasible cordon-toll schemes were considered for eight English towns, and optimal tolls were estimated. These are lower than theoretical computations suggest, as only central-area traffic is tolled, shifting traffic from congested to uncongested areas. Cordon tolls seem reasonably robust and error tolerant in the demand elasticity estimates, provided that these (and the resulting tolls) are pitched low.