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Highway toll pricing

Listed author(s):
  • Dong, Baomin
  • Guo, Guixia
  • Wang, Yuntong

For a tolled highway where consecutive segments allow vehicles to enter and exit unrestrictedly, we propose a simple toll pricing method. It is shown that the method is the unique method satisfying the classical axioms of Additivity and Dummy in the cost sharing literature, and the axioms of Toll Upper Bound for Local Traffic and Routing-proofness. We also show that the toll pricing method is the only method satisfying Routing-proofness Axiom and Cost Recovery Axiom. The main axiom in the characterizations is Routing-proofness which says that no vehicle can reduce its toll charges by exiting and re-entering intermediately. In the special case when there is only one unit of traffic (vehicle) for each (feasible) pair of entrance and exit, we show that our toll pricing method is the Shapley value of an associated game to the problem. In the case when there is one unit of traffic entering at each entrance but they all exit at the last exit, our toll pricing method coincides with the well-known airport landing fee solution-the Sequential Equal Contribution rule of Littlechild and Owen (1973).

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File URL: http://www.sciencedirect.com/science/article/pii/S0377221712001348
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Article provided by Elsevier in its journal European Journal of Operational Research.

Volume (Year): 220 (2012)
Issue (Month): 3 ()
Pages: 744-751

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Handle: RePEc:eee:ejores:v:220:y:2012:i:3:p:744-751
DOI: 10.1016/j.ejor.2012.02.017
Contact details of provider: Web page: http://www.elsevier.com/locate/eor

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  1. Moulin, Herve & Shenker, Scott, 1992. "Serial Cost Sharing," Econometrica, Econometric Society, vol. 60(5), pages 1009-1037, September.
  2. Moulin, Herve, 2002. "Axiomatic cost and surplus sharing," Handbook of Social Choice and Welfare,in: K. J. Arrow & A. K. Sen & K. Suzumura (ed.), Handbook of Social Choice and Welfare, edition 1, volume 1, chapter 6, pages 289-357 Elsevier.
  3. Castano-Pardo, Alberto & Garcia-Diaz, Alberto, 1995. "Highway cost allocation: An application of the theory of nonatomic games," Transportation Research Part A: Policy and Practice, Elsevier, vol. 29(3), pages 187-203, May.
  4. Dominique Henriet & Herve' Moulin, 1996. "Traffic-Based Cost Allocation in a Network," RAND Journal of Economics, The RAND Corporation, vol. 27(2), pages 332-345, Summer.
  5. Sun, Lian-Ju & Gao, Zi-You, 2007. "An equilibrium model for urban transit assignment based on game theory," European Journal of Operational Research, Elsevier, vol. 181(1), pages 305-314, August.
  6. Palma, André de & Lindsey, Robin & Proost, Stef, 2006. "Research challenges in modelling urban road pricing: An overview," Transport Policy, Elsevier, vol. 13(2), pages 97-105, March.
  7. Newbery, David M, 1988. "Road Damage Externalities and Road User Charges," Econometrica, Econometric Society, vol. 56(2), pages 295-316, March.
  8. S. C. Littlechild & G. Owen, 1973. "A Simple Expression for the Shapley Value in a Special Case," Management Science, INFORMS, vol. 20(3), pages 370-372, November.
  9. Ian W. H. Parry & Margaret Walls & Winston Harrington, 2007. "Automobile Externalities and Policies," Journal of Economic Literature, American Economic Association, vol. 45(2), pages 373-399, June.
  10. Newbery, David M, 1989. "Cost Recovery from Optimally Designed Roads," Economica, London School of Economics and Political Science, vol. 56(222), pages 165-185, May.
  11. William Thomson, 2007. "Cost allocation and airport problems," RCER Working Papers 537, University of Rochester - Center for Economic Research (RCER).
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