Toll pricing with elastic demand and heterogeneous users



Publication Details

Wang, S., Harrison, M. D. & Dunbar, M. E. (2014). Toll pricing with elastic demand and heterogeneous users. Second International Conference on Vulnerability and Risk Analysis and Management (ICVRAM 2014), Sixth International Symposium on Uncertainty Modelling and Analysis (ISUMA 2014) (pp. 2265-2271). United States: American Society of Civil Engineers.


We consider a general transportation network where travelers are categorized into classes according to their value-of-time (VOTs). The travel demand of each class in each origin-destination (OD) pair is a known decreasing function of the generalized travel cost to reflect different values of the trips. We give an economic interpretation of elastic demand with user heterogeneity. We further consider the first-best pricing problem with elastic demand with heterogeneous users. We show that such a nonnegative toll always exists, and finding such a toll is simple in that only a convex optimization problem needs to be solved.

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