Personalized Pareto-Improving Pricing-and-Routing Schemes for Near-Optimum Freight Routing: An Alternative Approach to Congestion Pricing

We design a coordination mechanism for truck drivers that uses pricing-and-routing schemes that can help alleviate traffic congestion in a general transportation network. We consider the user heterogeneity in Value-Of-Time (VOT) by adopting a multi-class model with stochastic Origin-Destination (OD) demands for the truck drivers. The main characteristic of the mechanism is that the coordinator asks the truck drivers to declare their desired OD pair and pick their individual VOT from a set of $N$ available options, and guarantees that the resulting pricing-and-routing scheme is Pareto-improving, i.e. every truck driver will be better-off compared to the User Equilibrium (UE) and that every truck driver will have an incentive to truthfully declare his/her VOT, while leading to a revenue-neutral (budget balanced) on average mechanism. This approach enables us to design personalized (VOT-based) pricing-and-routing schemes. We show that the Optimum Pricing Scheme (OPS) can be calculated by solving a nonconvex optimization problem. To improve computational efficiency, we propose an Approximately Optimum Pricing Scheme (AOPS) and prove that it satisfies the aforementioned properties. Both pricing-and-routing schemes are compared to the Congestion Pricing with Uniform Revenue Refunding (CPURR) scheme through extensive simulation experiments where it is shown that OPS and AOPS achieve a much lower expected total travel time and expected total monetary cost for the users compared to the CPURR scheme, without negatively affecting the rest of the network. These results demonstrate the efficiency of personalized (VOT-based) pricing-and-routing schemes.