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Minimal-revenue congestion pricing: some more good-news and bad-news

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  • Penchina, Claude M.

Abstract

Dial [Transportation Research B 33 (1999) 189] derived a fast algorithm for computing Minimal-Revenue (MR) congestion pricing (tolls) in single-origin, multiple destination networks, with fixed demands. This pricing induces the same system optimized network flow as Marginal Cost congestion pricing (tolls). Dial reported "Bad News": the algorithm works for multiple destinations, but only one origin. We show some "Good News": the algorithm works also for multiple origins and a single destination. Dial reported "Good News": "MR tolls often remain constant even as trip demand changes". We show more "Good News"; two general conditions sufficient to cause piecewise constant MR tolls. Dial reported "No News": that the MR pricing supports elastic demand as well as fixed demand. We show here some "Bad News": when demands are elastic, MR pricing does not accomplish its purpose of replicating the system optimal flows generated by Marginal Cost (MC) congestion pricing. We provide numerical examples with tabular and graphical solutions to illustrate this failure of MR tolls.

Suggested Citation

  • Penchina, Claude M., 2004. "Minimal-revenue congestion pricing: some more good-news and bad-news," Transportation Research Part B: Methodological, Elsevier, vol. 38(6), pages 559-570, July.
    • Handle: RePEc:eee:transb:v:38:y:2004:i:6:p:559-570
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    References listed on IDEAS

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    1. Nathan H. Gartner, 1980. "Optimal Traffic Assignment with Elastic Demands: A Review Part II. Algorithmic Approaches," Transportation Science, INFORMS, vol. 14(2), pages 192-208, May.
    2. Dial, Robert B., 1999. "Minimal-revenue congestion pricing part I: A fast algorithm for the single-origin case," Transportation Research Part B: Methodological, Elsevier, vol. 33(3), pages 189-202, April.
    3. Nathan H. Gartner, 1980. "Optimal Traffic Assignment with Elastic Demands: A Review Part I. Analysis Framework," Transportation Science, INFORMS, vol. 14(2), pages 174-191, May.
    4. Dial, Robert B., 2000. "Minimal-revenue congestion pricing Part II: An efficient algorithm for the general case," Transportation Research Part B: Methodological, Elsevier, vol. 34(8), pages 645-665, November.
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    1. Sheu, Jiuh-Biing & Yang, Hai, 2008. "An integrated toll and ramp control methodology for dynamic freeway congestion management," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 387(16), pages 4327-4348.
    2. (Jeff) Ban, Xuegang & Ferris, Michael C. & Tang, Lisa & Lu, Shu, 2013. "Risk-neutral second best toll pricing," Transportation Research Part B: Methodological, Elsevier, vol. 48(C), pages 67-87.
    3. Rambha, Tarun & Boyles, Stephen D. & Unnikrishnan, Avinash & Stone, Peter, 2018. "Marginal cost pricing for system optimal traffic assignment with recourse under supply-side uncertainty," Transportation Research Part B: Methodological, Elsevier, vol. 110(C), pages 104-121.

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