University of Twente Student Theses


Multi-Objective Road Pricing Problem: A Cooperative and Competitive Bilevel Optimization Approach

Ohazulike, Anthony E. (2009) Multi-Objective Road Pricing Problem: A Cooperative and Competitive Bilevel Optimization Approach.

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Abstract:Traffic externalities are increasingly becoming unbearable in most cities of the world. Congestion has caused many countries huge loss in man-hours which translates to huge amounts of money being lost every single day. Air qualities in most cities are not in accordance with the stipulated standards. This results in a severe health issues to innocent residents and endangers the existence of future generations. Restlessness and nuisance caused by unacceptable high noise level associated with road traffic are also increasingly becoming a point of concern by both inhabitants and the government. In most cities, accident and fatality rates resulting from road traffic are on the increase. By allowing much traffic or heavy duty vehicles on small pavements dilapidates these pavements, and this translates to the cost of road (or pavement) maintenance which is generally high. It has been shown from the famous Braess’ paradox that combating congestion by adding more infrastructures can worsen the situation if not properly planned. In most places in the world today, expansion of the existing infrastructures is practically impossible due to geographical and financial constraints. It is in view of the aforementioned among others that road traffic analysts suggest the use of road pricing to battle congestion. Economists suggest that by charging every user a toll equal to the cost he or she imposes on other users will lead to most efficient use of transportation network with respect to travel costs. This is what they call marginal social cost pricing (MSCP). Others claim that MSCP is not obtainable in practice and suggest the use of so called second best congestion toll pricing to battle congestion. In their views, most of them claim that battling congestion will take care of other externalities since they (other externalities) have direct link to congestion. This thesis argues that this is not the case in general. We show that the so called first best congestion charging does not give the most efficient use of transportation network in general. In all the models seen in literature to the best of our knowledge, they always assume that the transportation system is managed by a single decision maker, usually the government. In other words, they assume that only one body is capable of imposing tolls on roads. In this thesis, we look at a more general and realistic situation where different agencies or stakeholders set tolls on the road network to maximize their selfish interests. Specifically, for example, insurance companies may set tolls to minimize road accidents and have no interest in congestion, whereas the ministry of economics may be interested in minimizing man-hour loss in the traffic so as to boost productivity. Congestion charging may create negative benefits for society and thus, its main purpose (increasing transportation efficiency and social welfare) may be defeated. Because of this and increasing attention for problems resulting from road traffic externalities, we redefine the first best toll to include not only congestion cost but also cost arising from all other road traffic externalities. We design a flexible toll pattern to incorporate all the aforementioned externalities in our model, and in this way, road pricing will help to internalize these road traffic externalities. By internalizing externalities, we mean that the negative effects on the society caused by a user joining a road segment are accounted for in the user’s decision making process. Numerical results show that this yields a better result than the existing models that consider only congestion externality.
Item Type:Essay (Master)
Goudappel Coffeng
Faculty:EEMCS: Electrical Engineering, Mathematics and Computer Science
Subject:31 mathematics
Programme:Applied Mathematics MSc (60348)
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