Dynamic Revenue Management of a Toll Road Project under Transportation Demand Uncertainty
This study proposes a prototype quantitative method for dynamic revenue management of a private toll road, taking into account the long-term dynamics of transportation demand. This is first formulated as a stochastic singular control problem, in which the manager can choose the toll level from two discrete values. Each toll change requires nonnegative adjustment costs. Our analysis then reveals that the optimality condition reduces to standard linear complementarity problems, by using certain function transformation techniques. This enables us to develop an efficient algorithm for solving the problem, exploiting the recent advances in the theory of complementarity problems. Copyright Springer Science + Business Media, LLC 2006
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