Pricing, Capacity and Long-Run Cost Functions for First-Best and Second-Best Network Problems

Verhoef, Erik T.; Koh, Andrew; Shepherd, Simon

doi:10.2139/ssrn.1143283

Cited by 6 publications

(6 citation statements)

References 20 publications

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“…However, Kidokoro [30][31][32] does not deal with full networks. Verhoef, Koh, and Shepherd [29] extended Kidokoro's contribution, as will the present study.…”

Section: Previous Studiessupporting

confidence: 77%

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Optimal Link Tolls for Multi-node and Multi-link Transportation Networks Taking into Account the Welfare Cost of Fund Procurement

Ikeshita¹,

Fukuda²

2018

JTTE

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This study discusses the optimal link toll, which maximizes social surplus under a user equilibrium condition, with imperfect substitution assumption for route choice in a transportation network with many nodes and links, as well as taking into account the welfare cost of funds procurement. In contrast to previous studies, this study formulates optimal link tolls, taking into account the marginal cost of public funds (MCF), which is the marginal welfare loss of taxpayers due to a marginal tax raise. The formula for optimal tolls on links is derived from the following conditions. One is MCF classified into two, not taking into account funding (MCF equal to-1) and pricing for funding (MCF does not equal-1). Another is tolls classified into two, pricing on all links (full link pricing), and pricing on a specific link (partial link pricing). Following the above conditions, this study succeeds in deriving the formula for optimal tolls on a full network with many links and nodes. Furthermore, this study indicates two calculation methods: one is to solve analytically or numerically for when the functional form of link flow demand is known. When the functional form is unknown, such as a perfect substitution case, it is necessary to carry out iteration until convergence: with the traffic assignment given the price level and with a change in price level based on the traffic assignment.

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“…However, Kidokoro [30][31][32] does not deal with full networks. Verhoef, Koh, and Shepherd [29] extended Kidokoro's contribution, as will the present study.…”

Section: Previous Studiessupporting

confidence: 77%

“…Based on the Verhoef [22] proposed solution, Verhoef [23] focused on practical aspects when applying this general solution in the larger transport network model and his proposed solution was validated. Verhoef, Koh and Shepherd [29] succeeded in deriving partial link pricing with only perfect substitution on a full network.…”

Section: Previous Studiesmentioning

confidence: 99%

Optimal Link Tolls for Multi-node and Multi-link Transportation Networks Taking into Account the Welfare Cost of Fund Procurement

Ikeshita¹,

Fukuda²

2018

JTTE

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“…Because of variable-toll information issues and relatively high toll-application costs of the past, researchers and policymakers have focused on ''second-best'' deployments, like tolls on a small subset of links or use of areatype or cordon-type tolls (4,5,(39)(40)(41). First-best CP requires pricing of congestion externalities in real time on all congested links, making it impractical in the past or many current settings (28,38,42,43).…”

Section: First-best and Second-best Tolling Strategiesmentioning

confidence: 99%

“…Most CBCP research to date (36,46,47) puts emphasis on freeway tolls, because of the real cost of toll collection using past technologies. Most CP research focuses on small and generic networks (4,5,39,41,44,48), with difficulty in calculating and optimizing across complex, real networks. Recognizing the potential benefits of CBCP policy and emerging technologies (for 5G cellular applications, with free real-time routing guidance and low-cost on-board dongles, for example), this paper applies various road-pricing strategies across Austin's 6county region to compare the effects of different tolling strategies on travelers' behavior, traffic, and welfare.…”

Section: First-best and Second-best Tolling Strategiesmentioning

confidence: 99%

Traffic and Welfare Impacts of Credit-Based Congestion Pricing Applications: An Austin Case Study

Kockelman

Huang

2020

Transportation Research Record: Journal of the Transportation R

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This study seeks smart credit-based congestion pricing (CBCP) solutions for maximally improving travelers’ welfare by varying toll levels and locations across the Austin, Texas network. Scenarios evaluated include selecting links with maximum delays by variably tolling bridges and by recognizing congestion externalities across all links. Travel demand models deliver inputs for normalized logsum differences to quantify and compare consumer surplus changes across traveler types, around the region. Results suggest limited tolling locations under four broad times of day can do more harm than good, unless travelers shift out of the PM and AM peak periods or revenues are returned to travelers as credits. When using CBCP across all congested links at congested times of day (with 10% of revenues retained to cover system administrative costs), an average net benefit of $1.61 per licensed driver per weekday is estimated, with almost all travelers benefiting. For example, 95% of the traffic analysis zones’ lowest value of travel time (VOTT) group (VOTT1 = $5/hour) are expected to benefit from the CBCP policy. Tolling at twice the difference between marginal social cost and average travel cost (on each subset of congested links) appears to benefit more people, although tolling high on various links adds to congestion elsewhere. For example: tolling Austin’s highest-delay-producing or “top 500” links is estimated to benefit 98.5% of the zones’ highest VOTT (VOTT5 = $45/hour) travelers, while raising vehicle-miles traveled by just 0.8% (as a result of more circuitous, congestion- and toll-avoiding travel).

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“…The parameter values of 0.15 and 4 in (13) have been widely used in the specialized literature (see, e.g., [37][38][39][40][41][42][43][44], among many others). However, we used = 1 (linear costs) and = 8 in the calculations: the results are reported in Section 3.3.…”

Section: Description Of Networkmentioning

confidence: 99%

Numerical Bounds on the Price of Anarchy

Grange

Melo-Riquelme

Burgos

et al. 2017

Journal of Advanced Transportation

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Theoretical upper bounds for price of anarchy have been calculated in previous studies. We present an empirical analysis for the price of anarchy for congested transportation networks; different network sizes and demand levels are considered for each network. We obtain a maximum price of anarchy for the cases studied, which is notably lower than the theoretical bounds reported in the literature. This result should be carefully considered in the design and implementation of road pricing mechanisms for cities.

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Pricing, Capacity and Long-Run Cost Functions for First-Best and Second-Best Network Problems

Abstract: This paper considers the use of 'long-run cost functions' for congested networks in

Cited by 6 publications

References 20 publications

Optimal Link Tolls for Multi-node and Multi-link Transportation Networks Taking into Account the Welfare Cost of Fund Procurement

Optimal Link Tolls for Multi-node and Multi-link Transportation Networks Taking into Account the Welfare Cost of Fund Procurement

Traffic and Welfare Impacts of Credit-Based Congestion Pricing Applications: An Austin Case Study

Numerical Bounds on the Price of Anarchy

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