Abstract
The economic theory of traffic congestion is reviewed. The article starts with a discussion on a seminar contribution of Pigou and Knight. The later development of the determination of the optimal capacity of the infrastructure is reviewed. Recent analyses have paid explicit attention to the role of bottlenecks and queuing. Much of the literature is of theoretical nature and most of the empirical research that has been carried out is confined to the Pigou-Knight model and the associated determination of optimal capacity. The article is concluded with a short discussion of actual applications of the theory. In the near future an increasing interest in electronic toll collection may be expected.