Optimal Road Capacity with Hypercongestion in the Absence of Tolls

  • John F. McDonald
  • Edmond L. d’Ouville
  • Louie Nan Liu
Part of the Transportation Research, Economics and Policy book series (TRES)


In most urban areas, peak traffic volumes exceed the hypercongestion level at which traffic flow begins to decline in response to increases in density. It is an interesting and important question whether this situation reflects a chronic underinvestment in road capacity or whether outcomes of this nature may be socially optimal given the absence of congestion tolls. Previous analyses of optimal second-best capacity have either avoided the question or explicitly assumed that an optimal equilibrium point will not occur on the backward-bending portion of the average variable cost curve. See Wilson (1983), for example. This assumption may also arise implicitly where average variable cost is taken as a primitive concept and treated in the analysis as a strictly increasing function of road use.


Traffic Flow Price Elasticity Marginal Product Marginal Benefit Total Travel Time 
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Copyright information

© Springer Science+Business Media New York 1999

Authors and Affiliations

  • John F. McDonald
    • 1
  • Edmond L. d’Ouville
    • 2
  • Louie Nan Liu
    • 3
  1. 1.University of Illinois at ChicagoUSA
  2. 2.Indiana University NorthwestUSA
  3. 3.Louis Berger and AssociatesUSA

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