We propose a method to compute an equilibrium solution for the monocentric city model with traffic congestion, and to quantify the impact of cordon tolls on social surplus. The focus of this paper is on the comparison of road pricing of one and two cordons, with the no toll and first-best situations as benchmarks.
We find that a one-cordon toll yields a social efficiency of 63% with respect to first-best, and that an optimal two-cordon toll increases the efficiency to 73%. Both policies have a positive impact on C02 emissions because they reduce the average length of trips and reduce the road size.
