This chapter reviews recent theoretical and empirical studies on road congestion pricing and provision of capacity, in particular, second-best pricing, modeling dynamic congestion, and capacity choice. We discuss the basic principle of the second-best pricing, and summarize the contributions of cordon pricing, value pricing, and more sophisticated pricing schemes relying on information technology. Regarding dynamic congestion, there are various extensions of the bottleneck model, and a new strand of research on the macroscopic fundamental diagram (MFD) or bathtub model. We describe the basic theory of capacity choice with optimal pricing, then review subsequent studies on the second-best capacity choice, decentralized provision of capacity. Empirical research based on innovative data collection methods combined with advanced econometric techniques provides a more accurate evaluation of road pricing policies.
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