Reducing traffic externalities by multiple-cordon pricing

The second-best congestion pricing schemes including common optimum, one cordon, and multiple cordons schemes are compared with the first-best optimum pricing scheme. A cross-subsidy effect exists in these second-best pricing models. However, the scheme with more cordons will diminish the cross-subsidy and approach an efficient and equitable outcome. The relative efficiency of a cordon pricing scheme for the case of Taipei metropolis is very high. One single cordon yields excellent performance of 93% relative efficiency. There might be some factors causing the good results: the uncongested traffic condition, the linear unit distance cost in traffic flow forming a nonlinear cost function, and the trip demands with continuous space and the same destination (the central business district) in the network.