Simplified Formulation of the Toll Design Problem

Abstract

Much of the existing literature on congestion pricing has assumed that it is possible to toll every link in the network. Whereas this is very interesting theoretically, it is not of much use in practice where only a limited number of links can be tolled (e.g., certain bridges, tunnels, and freeways). To accommodate this situation, a bilevel formulation of the toll design problem that is similar in spirit to bilevel formulations of the continuous network design problem can be developed. Unfortunately, such formulations can be difficult to solve. A simplified, single-level formulation of the toll design problem that may prove to be more applicable in practice is presented.