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Dynamic Revenue Management of a Toll Road Project under Transportation Demand Uncertainty

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  • Takeshi Nagae

    ()

  • Takashi Akamatsu

    ()

Abstract

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

Suggested Citation

  • Takeshi Nagae & Takashi Akamatsu, 2006. "Dynamic Revenue Management of a Toll Road Project under Transportation Demand Uncertainty," Networks and Spatial Economics, Springer, vol. 6(3), pages 345-357, September.
  • Handle: RePEc:kap:netspa:v:6:y:2006:i:3:p:345-357
    DOI: 10.1007/s11067-9288-5
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    References listed on IDEAS

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    1. Arnott Richard & Kraus Marvin, 1995. "Financing Capacity in the Bottleneck Model," Journal of Urban Economics, Elsevier, vol. 38(3), pages 272-290, November.
    2. de Palma, Andre & Lindsey, Robin, 2002. "Private roads, competition, and incentives to adopt time-based congestion tolling," Journal of Urban Economics, Elsevier, vol. 52(2), pages 217-241, September.
    3. Yang, Hai & Hai-Jun, Huang, 1997. "Analysis of the time-varying pricing of a bottleneck with elastic demand using optimal control theory," Transportation Research Part B: Methodological, Elsevier, vol. 31(6), pages 425-440, November.
    4. Sunil Kumar & Kumar Muthuraman, 2004. "A Numerical Method for Solving Singular Stochastic Control Problems," Operations Research, INFORMS, vol. 52(4), pages 563-582, August.
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    Cited by:

    1. Lindsey, Robin & de Palma, André, 2014. "Cost recovery from congestion tolls with long-run uncertainty," Economics of Transportation, Elsevier, vol. 3(2), pages 119-132.
    2. repec:bla:presci:v:96:y:2017:i:1:p:163-190 is not listed on IDEAS
    3. Yu, Mengqiao & Ding, Yichuan & Lindsey, Robin & Shi, Cong, 2016. "A data-driven approach to manpower planning at U.S.–Canada border crossings," Transportation Research Part A: Policy and Practice, Elsevier, vol. 91(C), pages 34-47.
    4. Omid M. Rouhani & H. Oliver Gao, 2016. "Evaluating Various Road Ownership Structures and Potential Competition on an Urban Road Network," Networks and Spatial Economics, Springer, vol. 16(4), pages 1019-1042, December.

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