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Bisection-based trial-and-error implementation of marginal cost pricing and tradable credit scheme

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  • Wang, Xiaolei
  • Yang, Hai

Abstract

The purpose of this paper is three fold: First, it demonstrates the non-convergence of the bisection method proposed in the literature for the trial-and-error implementation of the marginal-cost pricing in the absence of a demand function. Second, it provides a modified version of the bisection method and establishes its convergence. Third, it adapts the modified bisection method for the trial-and-error implementation of the tradable credit scheme proposed recently, which can emulate a congestion pricing system in a revenue-neutral manner.

Suggested Citation

  • Wang, Xiaolei & Yang, Hai, 2012. "Bisection-based trial-and-error implementation of marginal cost pricing and tradable credit scheme," Transportation Research Part B: Methodological, Elsevier, vol. 46(9), pages 1085-1096.
    • Handle: RePEc:eee:transb:v:46:y:2012:i:9:p:1085-1096
    DOI: 10.1016/j.trb.2012.04.002
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    References listed on IDEAS

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    1. Li, Michael Z. F., 2002. "The role of speed-flow relationship in congestion pricing implementation with an application to Singapore," Transportation Research Part B: Methodological, Elsevier, vol. 36(8), pages 731-754, September.
    2. Zhao, Yong & Kockelman, Kara Maria, 2006. "On-line marginal-cost pricing across networks: Incorporating heterogeneous users and stochastic equilibria," Transportation Research Part B: Methodological, Elsevier, vol. 40(5), pages 424-435, June.
    3. Yang, Hai & Wang, Xiaolei, 2011. "Managing network mobility with tradable credits," Transportation Research Part B: Methodological, Elsevier, vol. 45(3), pages 580-594, March.
    4. Yang, Hai & Meng, Qiang & Lee, Der-Horng, 2004. "Trial-and-error implementation of marginal-cost pricing on networks in the absence of demand functions," Transportation Research Part B: Methodological, Elsevier, vol. 38(6), pages 477-493, July.
    5. Wang, Xiaolei & Yang, Hai & Zhu, Daoli & Li, Changmin, 2012. "Tradable travel credits for congestion management with heterogeneous users," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 48(2), pages 426-437.
    6. Han, Deren & Yang, Hai, 2009. "Congestion pricing in the absence of demand functions," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 45(1), pages 159-171, January.
    7. Qiang Meng & Zhiyuan Liu, 2011. "Trial-and-error method for congestion pricing scheme under side-constrained probit-based stochastic user equilibrium conditions," Transportation, Springer, vol. 38(5), pages 819-843, September.
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