IDEAS home Printed from https://ideas.repec.org/p/lan/wpaper/194217799.html
   My bibliography  Save this paper

Robust Toll Pricing

Author

Listed:
  • Trivikram Dokka Venkata Satyanaraya
  • Sonali Sen Gupta
  • Fabrice Talla Nobibon
  • Alain Zemkoho

Abstract

We study a robust toll pricing problem where toll setters and users have different level of information when taking their decisions. Toll setters do not have full information on the costs of the network and rely on historical information when determining toll rates, whereas users decide on the path to use from origin to destination knowing toll rates and having, in addition, more accurate traffic data. In this work, we first consider a single origin-destination parallel network and formulate the robust toll pricing problem as a distributionally robust optimization problem, for which we develop an exact algorithm based on a mixed-integer programming formulation and a heuristic based on two-point support distribution. We further extend our formulations to more general networks and show how our algorithms can be adapted for the general networks. Finally, we illustrate the usefulness of our approach by means of numerical experiments both on randomly generated networks and on the road network of the city of Chicago.

Suggested Citation

  • Trivikram Dokka Venkata Satyanaraya & Sonali Sen Gupta & Fabrice Talla Nobibon & Alain Zemkoho, 2017. "Robust Toll Pricing," Working Papers 194217799, Lancaster University Management School, Economics Department.
    • Handle: RePEc:lan:wpaper:194217799
    as

    Download full text from publisher

    File URL: http://www.lancaster.ac.uk/media/lancaster-university/content-assets/documents/lums/economics/working-papers/LancasterWP2017_023.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Dirk Bergemann & Karl Schlag, 2012. "Robust Monopoly Pricing," World Scientific Book Chapters, in: Robust Mechanism Design The Role of Private Information and Higher Order Beliefs, chapter 13, pages 417-441, World Scientific Publishing Co. Pte. Ltd..
    2. Dirk Bergemann & Karl H. Schlag, 2012. "Pricing Without Priors," World Scientific Book Chapters, in: Robust Mechanism Design The Role of Private Information and Higher Order Beliefs, chapter 12, pages 405-415, World Scientific Publishing Co. Pte. Ltd..
    3. Mustapha Bouhtou & Stan van Hoesel & Anton F. van der Kraaij & Jean-Luc Lutton, 2007. "Tariff Optimization in Networks," INFORMS Journal on Computing, INFORMS, vol. 19(3), pages 458-469, August.
    4. Omar Besbes & Assaf Zeevi, 2009. "Dynamic Pricing Without Knowing the Demand Function: Risk Bounds and Near-Optimal Algorithms," Operations Research, INFORMS, vol. 57(6), pages 1407-1420, December.
    5. Alizadeh, S.M. & Marcotte, P. & Savard, G., 2013. "Two-stage stochastic bilevel programming over a transportation network," Transportation Research Part B: Methodological, Elsevier, vol. 58(C), pages 92-105.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kanishka Misra & Eric M. Schwartz & Jacob Abernethy, 2019. "Dynamic Online Pricing with Incomplete Information Using Multiarmed Bandit Experiments," Marketing Science, INFORMS, vol. 38(2), pages 226-252, March.
    2. Benjamin R. Handel & Kanishka Misra, 2015. "Robust New Product Pricing," Marketing Science, INFORMS, vol. 34(6), pages 864-881, November.
    3. Król, Michał, 2012. "Product differentiation decisions under ambiguous consumer demand and pessimistic expectations," International Journal of Industrial Organization, Elsevier, vol. 30(6), pages 593-604.
    4. Martin Szydlowski, 2012. "Ambiguity in Dynamic Contracts," Discussion Papers 1543, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    5. Nenad Kos & Matthias Messner, 2015. "Selling to the mean," Working Papers 551, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    6. Vinicius Carrasco & Vitor Farinha Luz & Paulo K. Monteiro & Humberto Moreira, 2019. "Robust mechanisms: the curvature case," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 68(1), pages 203-222, July.
    7. Stoye, Jörg, 2012. "Minimax regret treatment choice with covariates or with limited validity of experiments," Journal of Econometrics, Elsevier, vol. 166(1), pages 138-156.
    8. Yeon-Koo Che & Weijie Zhong, 2021. "Robustly Optimal Mechanisms for Selling Multiple Goods," Papers 2105.02828, arXiv.org, revised Aug 2024.
    9. Amine Allouah & Omar Besbes, 2020. "Prior-Independent Optimal Auctions," Management Science, INFORMS, vol. 66(10), pages 4417-4432, October.
    10. Wanchang Zhang, 2022. "Auctioning Multiple Goods without Priors," Papers 2204.13726, arXiv.org.
    11. Alexei Parakhonyak & Anton Sobolev, 2022. "Persuasion without Priors," Economics Series Working Papers 977, University of Oxford, Department of Economics.
    12. Maxime C. Cohen & Georgia Perakis & Robert S. Pindyck, 2015. "Pricing with Limited Knowledge of Demand," NBER Working Papers 21679, National Bureau of Economic Research, Inc.
    13. Will Ma & David Simchi-Levi & Chung-Piaw Teo, 2021. "On Policies for Single-Leg Revenue Management with Limited Demand Information," Operations Research, INFORMS, vol. 69(1), pages 207-226, January.
    14. Kasberger, Bernhard & Woodward, Kyle, 2021. "Bidding in Multi-Unit Auctions under Limited Information," MPRA Paper 111185, University Library of Munich, Germany.
    15. Ju Hu & Xi Weng, 2021. "Robust persuasion of a privately informed receiver," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 72(3), pages 909-953, October.
    16. Duarte Gonc{c}alves & Bruno A. Furtado, 2024. "Statistical Mechanism Design: Robust Pricing, Estimation, and Inference," Papers 2405.17178, arXiv.org.
    17. Handel, Benjamin R. & Misra, Kanishka & Roberts, James W., 2013. "Robust firm pricing with panel data," Journal of Econometrics, Elsevier, vol. 174(2), pages 165-185.
    18. Mustafa Ç. Pınar, 2018. "Robust trading mechanisms over 0/1 polytopes," Journal of Combinatorial Optimization, Springer, vol. 36(3), pages 845-860, October.
    19. Suzdaltsev, Alex, 2022. "Distributionally robust pricing in independent private value auctions," Journal of Economic Theory, Elsevier, vol. 206(C).
    20. Szydlowski, Martin & Yoon, Ji Hee, 2022. "Ambiguity in dynamic contracts," Journal of Economic Theory, Elsevier, vol. 199(C).

    More about this item

    Keywords

    Toll-pricing; Conditional value at risk; Robust optimization;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:lan:wpaper:194217799. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Giorgio Motta (email available below). General contact details of provider: https://edirc.repec.org/data/delanuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.