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Second best toll and capacity optimisation in network: solution algorithm and policy implications

Koh, Andrew, Shepherd, Simon and Sumalee, Agachai (2009) Second best toll and capacity optimisation in network: solution algorithm and policy implications. Transportation, 36 (2). pp. 147-165. ISSN 1572-9435

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This paper looks at the first and second-best jointly optimal toll and road capacity investment problems from both policy and technical oriented perspectives. On the technical side, the paper investigates the applicability of the constraint cutting algorithm for solving the second-best problem under elastic demand which is formulated as a bilevel programming problem. The approach is shown to perform well despite several problems encountered by our previous work in Shepherd and Sumalee (2004). The paper then applies the algorithm to a small sized network to investigate the policy implications of the first and second-best cases. This policy analysis demonstrates that the joint first best structure is to invest in the most direct routes while reducing capacities elsewhere. Whilst unrealistic this acts as a useful benchmark. The results also show that certain second best policies can achieve a high proportion of the first best benefits while in general generating a revenue surplus. We also show that unless costs of capacity are known to be low then second best tolls will be affected and so should be analysed in conjunction with investments in the network.

Item Type: Article
Copyright, Publisher and Additional Information: © 2009 Springer. This is an author produced version of a paper published in Transportation. Uploaded in accordance with the publisher's self archiving policy.
Keywords: second-best toll, optimal toll and capacity, bilevel optimization
Institution: The University of Leeds
Academic Units: The University of Leeds > Faculty of Environment (Leeds) > Institute for Transport Studies (Leeds)
Funding Information:
FunderGrant number
Engineering and Physical Science Research Council560536
Depositing User: MR ANDREW KOH
Date Deposited: 26 Mar 2009 15:18
Last Modified: 08 Feb 2013 17:06
Published Version: http://dx.doi.org/10.1007/s11116-009-9187-y
Status: Published
Publisher: Springer
Refereed: Yes
Identification Number: 10.1007/s11116-009-9187-y
URI: http://eprints.whiterose.ac.uk/id/eprint/8478

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