Article ID Journal Published Year Pages File Type
1132045 Transportation Research Part B: Methodological 2013 14 Pages PDF
Abstract

•A two-stage stochastic extension of a generic pricing model.•Reformulation as a single-stage bilevel program, and next as a mixed integer program.•Analysis of the theoretical properties of the model.•Sensitivity analysis with respect to a parameter that limits the difference between first and second-stage tariffs.

We consider a two-stage stochastic extension of the bilevel pricing model introduced by Labbé et al. (1998). In the first stage, the leader sets tariffs on a subset of arcs of a transportation network, with the aim of maximizing profits while, at the lower level, flows are assigned to cheapest paths of a multicommodity transportation network. In the second stage, the situation repeats itself under the constraint that tariffs should not differ too widely from those set at the first stage, a condition that frequently arises in practice. We analyze properties of the model, provide numerical illustrations, and open avenues for further research into this area.

Related Topics
Social Sciences and Humanities Decision Sciences Management Science and Operations Research
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