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Modeling variable demand equilibrium under second-best road pricing

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  • Zhang, H. M.
  • Ge, Y. E.

Abstract

This paper presents a class of parameterized second-best road pricing schemes, where the toll on each tolled link is proportional to the Pigouvian charge (i.e., the difference between marginal social cost and marginal private cost). A general framework is formulated to model variable demand equilibrium under parameterized road pricing schemes of this kind, which yields an Hybrid-equilibrium (or H-equilibrium for short) solution. From an economic point of view, the formulated model is shown to be able to evaluate the parameterized pricing scheme embedded in the model. Applications including the evaluation of road pricing schemes and the issue of road pricing design are employed to highlight the attractive features of the proposed H-equilibrium formulation.

Suggested Citation

  • Zhang, H. M. & Ge, Y. E., 2004. "Modeling variable demand equilibrium under second-best road pricing," Transportation Research Part B: Methodological, Elsevier, vol. 38(8), pages 733-749, September.
    • Handle: RePEc:eee:transb:v:38:y:2004:i:8:p:733-749
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    2. Chen, Daqiang & Ignatius, Joshua & Sun, Danzhi & Goh, Mark & Zhan, Shalei, 2018. "Impact of congestion pricing schemes on emissions and temporal shift of freight transport," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 118(C), pages 77-105.
    3. Rouhani, Omid M. & Niemeier, Debbie, 2014. "Flat versus spatially variable tolling: A case study in Fresno, California," Journal of Transport Geography, Elsevier, vol. 37(C), pages 10-18.
    4. Holgun-Veras, Jos & Cetin, Mecit, 2009. "Optimal tolls for multi-class traffic: Analytical formulations and policy implications," Transportation Research Part A: Policy and Practice, Elsevier, vol. 43(4), pages 445-467, May.
    5. Rodriguez-Roman, Daniel & Ritchie, Stephen G., 2020. "Surrogate-based optimization for multi-objective toll design problems," Transportation Research Part A: Policy and Practice, Elsevier, vol. 137(C), pages 485-503.
    6. Chi Xie & Xing Wu & Stephen Boyles, 2019. "Traffic equilibrium with a continuously distributed bound on travel weights: the rise of range anxiety and mental account," Annals of Operations Research, Springer, vol. 273(1), pages 279-310, February.
    7. Zhu, Shanjiang & Du, Longyuan & Zhang, Lei, 2013. "Rationing and pricing strategies for congestion mitigation: Behavioral theory, econometric model, and application in Beijing," Transportation Research Part B: Methodological, Elsevier, vol. 57(C), pages 210-224.
    8. Joakim Ekström & Leonid Engelson & Clas Rydergren, 2009. "Heuristic algorithms for a second-best congestion pricing problem," Netnomics, Springer, vol. 10(1), pages 85-102, April.
    9. Holgui­n-Veras, Jose & Cetin, Mecit & Xia, Shuwen, 2006. "A comparative analysis of US toll policy," Transportation Research Part A: Policy and Practice, Elsevier, vol. 40(10), pages 852-871, December.
    10. Liu, Zhiyuan & Wang, Zewen & Cheng, Qixiu & Yin, Ruyang & Wang, Meng, 2021. "Estimation of urban network capacity with second-best constraints for multimodal transport systems," Transportation Research Part B: Methodological, Elsevier, vol. 152(C), pages 276-294.
    11. Rodrigo Garrido, 2008. "Road Pricing for Hazardous Materials Transportation in Urban Networks," Networks and Spatial Economics, Springer, vol. 8(2), pages 273-285, September.
    12. M. Rouhani, Omid, 2014. "Road pricing: An overview," MPRA Paper 59662, University Library of Munich, Germany.
    13. Cipriani, Ernesto & Mannini, Livia & Montemarani, Barbara & Nigro, Marialisa & Petrelli, Marco, 2019. "Congestion pricing policies: Design and assessment for the city of Rome, Italy," Transport Policy, Elsevier, vol. 80(C), pages 127-135.
    14. Zhong, Shaopeng & Cheng, Rong & Jiang, Yu & Wang, Zhong & Larsen, Allan & Nielsen, Otto Anker, 2020. "Risk-averse optimization of disaster relief facility location and vehicle routing under stochastic demand," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 141(C).

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