Multi-objective cordon price design to control long run adverse traffic effects in large urban areas

Pricing is seen as a viable alternative to manage the demand for transportation facilities. While supply increase might aggravate the problem, pricing is envisaged to relieve large cities from adverse traffic effects (congestion and pollution, among others). Nevertheless, pricing has its own drawbacks, often overlooked by the operators of the networks. It will cause changes in the travel behavior of the different groups and their demands (shoppers, retailers, and even basic businesses/ employees). This paper presents an extensive review of the subject, and an equilibrium model to estimate the long–run effects of a cordon pricing scheme. The problem of designing a price for a Central Business District (CBD) cordon is formulated in this study as a bi-level optimization problem. The lower level problem is a joint trip production-distribution-mode choice-assignment problem, with interactions among three groups of the users (agents). The upper level problem is a multi-objective decision-making problem, where CBD cordon price (as decision variable) forms the alternatives. It monitors four important objectives, namely maximization of consumers’ surplus, minimization of air pollution and congestion measures, as well as minimization of the internal migration of the retail employment. The latter is a main cause of the CBD degradation. The demands for shoppers and retailers are elastic, but that of the basic employees is assumed inelastic. Two test problems are examined and solved to show the behavior of the model. The results show that by employing under-pricing, or over-pricing, the cordon would lead to an unfavorable situation in that it would decrease the consumers’ surplus, and increase pollution and congestion levels. Moreover, at certain price levels the rate of migration would drastically increase, while it might be relatively insensitive to price in other ranges. Copyright Springer Science+Business Media New York 2015