Existence of anonymous link tolls for system optimum on networks with mixed equilibrium behaviors

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Existence of anonymous link tolls for system optimum on networks with mixed equilibrium behaviors

Yang, Hai / Zhang, Xiaoning

AbstractThe notions of user equilibrium (UE) and system optimum (SO) often allude to the literature together with the well-known principle of marginal-cost pricing in traffic network analyses. This pricing principle states that the UE flow pattern on a network can be driven to an SO in the sense of total travel cost minimization by charging a toll on each link equal to the difference between marginal social cost and marginal private cost. In reality, users do not always behave in a UE manner, typically when there exist oligopoly Cournot–Nash (CN) firms. Users in a CN firm cooperate among themselves to minimize total cost of the firm and compete against others. In the presence of such UE–CN mixed equilibrium behaviors, we are interested in whether an SO flow pattern remains attainable by meaningful link tolls. In this paper we show that in a network with both UE and CN users, applying the traditional marginal-cost pricing for a system optimum requires that link tolls be differentiated across user classes. Because users differ from one another in an unobservable way, it is impossible to introduce discriminatory tolling on a network in a mixed behaviour equilibrium. We then seek alternative meaningful tolls by establishing the existence of nonnegative anonymous link tolls to decentralize the SO into a UE–CN mixed behavior equilibrium with resort to a rigorous mathematical programming approach.