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Dynamic Revenue Management of a Toll Road Project under Transportation Demand Uncertainty

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  • Takeshi Nagae
  • Takashi Akamatsu

Abstract

This study proposes a prototype quantitative method for dynamic revenue management of a private toll road, taking into account the long-term dynamics of transportation demand. This is first formulated as a stochastic singular control problem, in which the manager can choose the toll level from two discrete values. Each toll change requires nonnegative adjustment costs. Our analysis then reveals that the optimality condition reduces to standard linear complementarity problems, by using certain function transformation techniques. This enables us to develop an efficient algorithm for solving the problem, exploiting the recent advances in the theory of complementarity problems. Copyright Springer Science + Business Media, LLC 2006

Suggested Citation

  • Takeshi Nagae & Takashi Akamatsu, 2006. "Dynamic Revenue Management of a Toll Road Project under Transportation Demand Uncertainty," Networks and Spatial Economics, Springer, vol. 6(3), pages 345-357, September.
    • Handle: RePEc:kap:netspa:v:6:y:2006:i:3:p:345-357
    DOI: 10.1007/s11067-9288-5
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    References listed on IDEAS

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    Cited by:

    1. Prateek Bansal & Rohan Shah & Stephen D. Boyles, 2018. "Robust network pricing and system optimization under combined long-term stochasticity and elasticity of travel demand," Transportation, Springer, vol. 45(5), pages 1389-1418, September.
    2. Lindsey, Robin & de Palma, André, 2014. "Cost recovery from congestion tolls with long-run uncertainty," Economics of Transportation, Elsevier, vol. 3(2), pages 119-132.
    3. Zhi-Chun Li & Qian-Wen Guo, 2017. "Optimal time for implementing cordon toll pricing scheme in a monocentric city," Papers in Regional Science, Wiley Blackwell, vol. 96(1), pages 163-190, March.
    4. Gardner, Lauren M. & Boyles, Stephen D. & Waller, S. Travis, 2011. "Quantifying the benefit of responsive pricing and travel information in the stochastic congestion pricing problem," Transportation Research Part A: Policy and Practice, Elsevier, vol. 45(3), pages 204-218, March.
    5. Omid M. Rouhani & H. Oliver Gao, 2016. "Evaluating Various Road Ownership Structures and Potential Competition on an Urban Road Network," Networks and Spatial Economics, Springer, vol. 16(4), pages 1019-1042, December.
    6. Hongyan Chen & Ruwen Qin, 2012. "Real options as an incentive scheme for managing revenues in transportation infrastructure projects," International Journal of Revenue Management, Inderscience Enterprises Ltd, vol. 6(1/2), pages 77-101.
    7. Chung, Byung Do & Yao, Tao & Friesz, Terry L. & Liu, Hongcheng, 2012. "Dynamic congestion pricing with demand uncertainty: A robust optimization approach," Transportation Research Part B: Methodological, Elsevier, vol. 46(10), pages 1504-1518.
    8. Yu, Mengqiao & Ding, Yichuan & Lindsey, Robin & Shi, Cong, 2016. "A data-driven approach to manpower planning at U.S.–Canada border crossings," Transportation Research Part A: Policy and Practice, Elsevier, vol. 91(C), pages 34-47.

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