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

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  • Takeshi Nagae

    ()

  • Takashi Akamatsu

    ()

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    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

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    File URL: http://hdl.handle.net/10.1007/s11067-9288-5
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    Bibliographic Info

    Article provided by Springer in its journal Networks and Spatial Economics.

    Volume (Year): 6 (2006)
    Issue (Month): 3 (September)
    Pages: 345-357

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    Handle: RePEc:kap:netspa:v:6:y:2006:i:3:p:345-357

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    Web page: http://www.springerlink.com/link.asp?id=106607

    Related research

    Keywords: Toll road projects; Dynamic revenue management; Transportation demand uncertainty; Stochastic singular control; Generalized complementarity problem;

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    1. Yang, Hai & Hai-Jun, Huang, 1997. "Analysis of the time-varying pricing of a bottleneck with elastic demand using optimal control theory," Transportation Research Part B: Methodological, Elsevier, vol. 31(6), pages 425-440, November.
    2. de Palma, Andre & Lindsey, Robin, 2002. "Private roads, competition, and incentives to adopt time-based congestion tolling," Journal of Urban Economics, Elsevier, vol. 52(2), pages 217-241, September.
    3. Arnott Richard & Kraus Marvin, 1995. "Financing Capacity in the Bottleneck Model," Journal of Urban Economics, Elsevier, vol. 38(3), pages 272-290, November.
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