Value of dynamic revenue-maximizing congestion pricing in a highly congested corridor

Abstract

This paper examines the value of utilizing dynamic, revenue-maximizing, congestion pricing on a privately operated tolled route, when the only alternative is a highly congested, public, free-access route. Three methods are specified by which revenue can be maximized—through the selection of a fixed percent of users to set the toll price for, through the selection of a fixed level of service on the toll road, and through the use of a nonlinear optimization model. These methods are tested on a case study involving a highly congested corridor. In simulation, the corridor’s flow rates are observed following the posting of a toll, the toll is updated, and the new flow observed until a subsequent round of revenue maximizing is applied to the new conditions. It was concluded that in a highly congested corridor a dynamic, revenue-maximizing toll can finance the construction of new capacity without degrading social welfare.