A BI-LEVEL FORMULATION AND QUASI-NEWTON ALGORITHM FOR STOCHASTIC EQUILIBRIUM NETWORK DESIGN PROBLEM WITH ELASTIC DEMAND

In this paper, a bi-level formulation of the continuous network design problem (NDP) is proposed on the basis of logit stochastic user equilibrium (SUE) assignment with elastic demand. The model determines the link capacity improvements by maximizing net economic benefit while considering changes in demand and traffic distribution in network. The derivatives of equilibrium link flows and objective function with respect to capacity expansion variables, which are analytically derived, can be computed without having to first find path choice information. These derivatives are employed to develop a quasi Newton algorithm with the BFG S (Broyden- Fletcher- Goldfarb-Shanno) formula for solving the nonlinear, nonconvex but differentiable SUE-constrained network design problem. The SUE assignment with elastic demand is solved by using the method of successive averages in conjunction with Bell's matrix inversion logit assignment method. Simple and complex example networks are presented to illustrate the model and the algorithm.