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Highway cost allocation: An application of the theory of nonatomic games

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  • Castano-Pardo, Alberto
  • Garcia-Diaz, Alberto

Abstract

The purpose of all highway cost allocation procedures is to divide in a fair and rational manner the cost building or rehabilitating highway facilities among the highway's users. This article proposes a solution approach to the highway cost allocation problem based on game theory. In this approach, every passage made on the road is viewed as a player in a game that has a large number of insignificant players. For this reason, it can be assumed to be a nonatomic game. Of all highway costs, pavement costs are the most difficult to allocate on the basis of relative damage caused by the user of a highway. A distinctive feature of the analysis conducted in this article is the consideration of a nonlinear programming model that optimizes the total cost of pavement as the characteristic function of the game. The distribution of pavement construction costs proposed by the Federal Highway Administration is essentially a numerical procedure for obtaining value. A solution to the nonatomic game is presented based on a set of axioms that result in allocations that are desirable for its properties. The solution obtained by the proposed approach is compared to existing highway cost allocation methodologies.

Suggested Citation

  • 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.
  • Handle: RePEc:eee:transa:v:29:y:1995:i:3:p:187-203
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    References listed on IDEAS

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    1. Hendrickson, Chris & Kane, Anthony, 1983. "Cost allocation by uniform traffic removal-- Theoretical discussion and example highway cost applications," Transportation Research Part B: Methodological, Elsevier, vol. 17(4), pages 265-274, August.
    2. Small, Kenneth A & Winston, Clifford, 1988. "Optimal Highway Durability," American Economic Review, American Economic Association, vol. 78(3), pages 560-569, June.
    3. Tijs, S.H. & Driessen, T.S.H., 1986. "Game theory and cost allocation problems," Other publications TiSEM 376c24c5-c95d-4d29-96b6-4, Tilburg University, School of Economics and Management.
    4. S. H. Tijs & T. S. H. Driessen, 1986. "Game Theory and Cost Allocation Problems," Management Science, INFORMS, vol. 32(8), pages 1015-1028, August.
    5. repec:bla:joares:v:19:y:1981:i:1:p:185-196 is not listed on IDEAS
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    Cited by:

    1. Carmona, Miguel, 2010. "The regulatory function in public-private partnerships for the provision of transport infrastructure," Research in Transportation Economics, Elsevier, vol. 30(1), pages 110-125.
    2. Dong, Baomin & Guo, Guixia & Wang, Yuntong, 2012. "Highway toll pricing," European Journal of Operational Research, Elsevier, vol. 220(3), pages 744-751.
    3. Agbelie, Bismark R.D.K. & Labi, Samuel & Sinha, Kumares C., 2017. "Estimating the marginal costs of bridge damage due to overweight vehicles using a modified equivalent-vehicle methodology and in-service data on life-cycle costs and usage," Transportation Research Part A: Policy and Practice, Elsevier, vol. 95(C), pages 275-288.
    4. Jens Leth Hougaard & Jørgen Tind, 2013. "Cost Allocation with Limited Information," MSAP Working Paper Series 01_2013, University of Copenhagen, Department of Food and Resource Economics.
    5. Kattuman, P.A. & Green, R.J. & Bialek, J.W., 2001. "A Tracing Method for Pricing Inter-Area Electricity Trades," Cambridge Working Papers in Economics 0107, Faculty of Economics, University of Cambridge.
    6. Kuipers, Jeroen & Mosquera, Manuel A. & Zarzuelo, José M., 2013. "Sharing costs in highways: A game theoretic approach," European Journal of Operational Research, Elsevier, vol. 228(1), pages 158-168.
    7. Emile Quinet, 2005. "Alternative Pricing Doctrines," Post-Print halshs-00754067, HAL.
    8. Quinet, Emile, 2005. "Alternative Pricing Doctrines," Research in Transportation Economics, Elsevier, vol. 14(1), pages 19-47, January.
    9. Bogetoft, Peter & Hougaard, Jens Leth & Smilgins, Aleksandrs, 2016. "Applied cost allocation: The DEA–Aumann–Shapley approach," European Journal of Operational Research, Elsevier, vol. 254(2), pages 667-678.

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