The marginal cost pricing under stochastic network

Agachai Sumalee, Wei Xu

Research output: Chapter in book / Conference proceedingConference article published in proceeding or bookAcademic researchpeer-review

1 Citation (Scopus)

Abstract

The well-known marginal cost pricing (MCP) has been extensively studied under the case with deterministic travel demand. However, this assumption may not be realistic due to the existence of variability and uncertainty in travel demand from day to day. This paper attempts to investigate the MCP under the stochastic network (SN-MCP) in which demand uncertainties are explicitly considered. We show that the first-best SN-MCP cannot be evaluated by only replacing the link flow and link travel time in the original MCP with their expected values. This naïve calculation will underestimate the external cost incurred by an additional road user's entry on each link. The paper then derives the true first-best SN-MCP which is then compared to naïve formulation. In numerical experiments, the expected total travel time under different MCP schemes is examined. The comparison shows that the more uncertain the travel demand, the higher the gap between the true and naïve SN-MCPs.
Original languageEnglish
Title of host publicationProceedings of the 13th International Conference of Hong Kong Society for Transportation Studies
Subtitle of host publicationTransportation and Management Science
Pages475-484
Number of pages10
Publication statusPublished - 1 Dec 2008
Event13th International Conference of Hong Kong Society for Transportation Studies: Transportation and Management Science - Kowloon, Hong Kong
Duration: 13 Dec 200815 Dec 2008

Conference

Conference13th International Conference of Hong Kong Society for Transportation Studies: Transportation and Management Science
Country/TerritoryHong Kong
CityKowloon
Period13/12/0815/12/08

ASJC Scopus subject areas

  • Transportation

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