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Trial-and-error implementation of marginal-cost pricing on networks in the absence of demand functions

  • Yang, Hai
  • Meng, Qiang
  • Lee, Der-Horng
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Conventional analysis of optimal congestion pricing relies on three primary elements, namely, the speed-flow relationship, the demand function, and the generalized cost. Analytical demand functions tailed for congestion pricing are, however, difficult to establish in practice even with advanced transport modeling techniques. Inspired and motivated by the recent commentary and analytical works in the literature, this study proposes a trial-and-error implementation scheme of marginal-cost pricing on a general road network when the demand functions are unknown. Given a trial of a set of link tolls, the revealed aggregate link flows can be observed at ease; based on the observed link flows, a new set of link tolls can be determined and used for the next trial. We propose such an iterative toll adjustment procedure based on the method of successive averages, and present a rigorous theoretical proof of its convergence. The iterative procedure presented here allows for a traffic planner to estimate easily the socially optimal congestion tolls in a network without resorting to demand functions.

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Article provided by Elsevier in its journal Transportation Research Part B: Methodological.

Volume (Year): 38 (2004)
Issue (Month): 6 (July)
Pages: 477-493

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Handle: RePEc:eee:transb:v:38:y:2004:i:6:p:477-493
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  1. Yang, Hai & Iida, Yasunori & Sasaki, Tsuna, 1994. "The equilibrium-based origin-destination matrix estimation problem," Transportation Research Part B: Methodological, Elsevier, vol. 28(1), pages 23-33, February.
  2. Yang, Hai & Bell, Michael G. H., 1997. "Traffic restraint, road pricing and network equilibrium," Transportation Research Part B: Methodological, Elsevier, vol. 31(4), pages 303-314, August.
  3. Yang, Hai & Huang, Hai-Jun, 1998. "Principle of marginal-cost pricing: how does it work in a general road network?," Transportation Research Part A: Policy and Practice, Elsevier, vol. 32(1), pages 45-54, January.
  4. Paulley, Neil, 2002. "Recent studies on key issues in road pricing," Transport Policy, Elsevier, vol. 9(3), pages 175-177, July.
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