Robust Toll Pricing

Trivikram Dokka Venkata Satyanaraya, Sonali Sen Gupta, Fabrice Talla Nobibon and Alain Zemkoho

No 194217799, Working Papers from Lancaster University Management School, Economics Department

Abstract: We study a robust toll pricing problem where toll setters and users have different level of information when taking their decisions. Toll setters do not have full information on the costs of the network and rely on historical information when determining toll rates, whereas users decide on the path to use from origin to destination knowing toll rates and having, in addition, more accurate traffic data. In this work, we first consider a single origin-destination parallel network and formulate the robust toll pricing problem as a distributionally robust optimization problem, for which we develop an exact algorithm based on a mixed-integer programming formulation and a heuristic based on two-point support distribution. We further extend our formulations to more general networks and show how our algorithms can be adapted for the general networks. Finally, we illustrate the usefulness of our approach by means of numerical experiments both on randomly generated networks and on the road network of the city of Chicago.

Keywords: Toll-pricing; Conditional value at risk; Robust optimization (search for similar items in EconPapers)
JEL-codes: C61 C63 D80 (search for similar items in EconPapers)
Date: 2017
New Economics Papers: this item is included in nep-cmp, nep-ore, nep-rmg, nep-tre and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:lan:wpaper:194217799

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