Bisection-based trial-and-error implementation of marginal cost pricing and tradable credit scheme

Xiaolei Wang and Hai Yang

Transportation Research Part B: Methodological, 2012, vol. 46, issue 9, 1085-1096

Abstract: The purpose of this paper is three fold: First, it demonstrates the non-convergence of the bisection method proposed in the literature for the trial-and-error implementation of the marginal-cost pricing in the absence of a demand function. Second, it provides a modified version of the bisection method and establishes its convergence. Third, it adapts the modified bisection method for the trial-and-error implementation of the tradable credit scheme proposed recently, which can emulate a congestion pricing system in a revenue-neutral manner.

Keywords: Marginal-cost pricing; Tradable credit scheme; Trial-and-error; Unknown demand function; Convergence (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (24)

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DOI: 10.1016/j.trb.2012.04.002

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