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A Bilevel Model of Taxation and Its Application to Optimal Highway Pricing

  • Martine Labbé

    (Institut de Statistique et Recherche Opérationnelle, Université Libre de Bruxelles, Boulevard du Triomphe, CP 210/01, B-1050 Bruxelles, Belgique)

  • Patrice Marcotte

    (Centre de recherche sur les Transports and Département d'Informatique et Recherche Opérationnelle, Université de Montréal, CP 6128, Succursale Centre-Ville, Montréal, Québec, Canada H3C 3J7)

  • Gilles Savard

    (GERAD and Département de mathématiques et génie industriel, Ecole Polytechnique de Montréal, CP 6079, Succursale Centre-Ville, Montréal, Québec, Canada H3C 3A7)

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    We consider a bilevel model where the leader wants to maximize revenues from a taxation scheme, while the follower rationally reacts to those tax levels. We focus our attention on the special case of a toll-setting problem defined on a multicommodity transportation network. We show that the general problem is NP-complete, while particular instances are polynomially solvable. Numerical examples are given.

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    Article provided by INFORMS in its journal Management Science.

    Volume (Year): 44 (1998)
    Issue (Month): 12-Part-1 (December)
    Pages: 1608-1622

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    Handle: RePEc:inm:ormnsc:v:44:y:1998:i:12-part-1:p:1608-1622
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