Multi-objective road pricing: a cooperative and competitive bilevel optimization approach

Costs associated with traffic externalities such as congestion, air pollution, noise, safety, etcetera are becoming unbearable. The Braess paradox shows that combating congestion by adding infrastructure may not improve traffic conditions, and geographical and/or financial constraints may not allow infrastructure expansion. Road pricing presents an alternative to combat traffic externalities. The traditional way of road pricing, namely congestion charging, may create negative benefits for society. In this effect, we develop a flexible pricing scheme internalizing costs arising from all externalities. Using a game theoretical approach, we extend the single authority road pricing scheme to a pricing scheme with multiple authorities/regions (with likely contradicting objectives).