This paper considers the use of ‘long-run cost functions’ for congested networks in solving second-best network problems, in which capacity and tolls are instruments. We derive analytical results both for general cost and demand functions and for specific functional forms, namely Bureau of...

Abstract Growing urban transport congestion is a major cause of environmental problems, as well as delays. One may argue that this is a classic problem of externalities and can be readily corrected by means of the price mechanism. However, although interest is increasing in pricing as an element...