An MPEC approach to second-best toll pricing

This paper addresses two second-best toll pricing problems, one with fixed and the other with elastic travel demands, as mathematical programs with equilibrium constraints. Several equivalent nonlinear programming formulations for the two problems are discussed. One formulation leads to properties that are of interest to transportation economists. Another produces an algorithm that is capable of solving large problems and easy to implement with existing software for linear and nonlinear programming problems. Numerical results using transportation networks from the literature are also presented.