Toll cordon design

Giuseppe Bellei, Guido Gentile

Dipartimento di Idraulica, Trasporti e Strade,
Università di Roma “La Sapienza”, Italy.

Abstract
Pricing is one of the best tools to improve the efficiency of highly congested
transportation networks. It has been shown that an optimal toll pattern can be
determined by applying the welfare-economics principle of marginal pricing.
Because implementing the marginal pricing solution to the toll optimization
problem requires charging each arc of the network any real valued toll, which is
not realistic, then it is worth addressing the problem with reference to specific
pricing schemes.
In this paper the case where the access of private vehicles to a distinct area of
the city is charged a toll is considered. The aim of the work is to define a
methodology capable to determine the optimal shape of the cordon delimiting
such a charged-access area, while the toll is assumed to be given and constant.

1 Introduction
Pricing is one of the best tools to improve the efficiency of highly congested
transportation networks. The methodological contributions concerning this topic
can be classified into two groups.
The first of them is founded on the welfare-economics principle of marginal
pricing, stating that, when external effects are present, an optimal equilibrium is
achievable, from a social point of view, by charging each decision-maker the
differences between marginal social costs and average individual costs. Within
the transportation field, this idea has been firstly applied to the equilibrium
assignment problem in Beckmann et. al. [1], where it is showed the optimality of
marginal pricing with respect to total user costs in a mono-user monomodal
deterministic context with rigid demand and separable arc cost functions. To this
end, an Efficient Allocation Problem is formulated actually seeking an optimal
flow pattern generally referred to as System Optimum. Tolls are then determined
accordingly. In Bellei, Gentile and Papola [2] the validity of the marginal pricing
principle is extended to any current multi-user multimodal stochastic equilibrium
model with elastic demand up to trip generation and non-separable arc cost
functions. To this end, a special case of Network Design Problem (NDP) where
the tolls are assumed to constitute a complete and unconstrained set of design
variables is formulated.
This means that implementing the marginal pricing solution to the toll
optimization problem requires the possibility of charging each arc of the network
any real valued toll, which is not realistic. Then it is worthful to address the
problem by defining specific pricing schemes.
In the second group of contributions, the charging of possibly constrained
tolls is restrained to any given subset of the network arcs, so formulating a more
general NDP, as in Yang [3], Ferrari [4] and Clune, Smith and Xiang [5], where
sensitivity analysis, polynomial approximation of the objective function and specific
bilevel optimization techniques, respectively, have been applied in the solution
algorithm.
In this paper the case where the access of private vehicles to a distinct area of
the city is charged a toll is considered. The aim of the work is to define a
methodology capable to determine the optimal shape of the cordon delimiting
such a charged-access area, while the toll is assumed to be given and constant,
which means that each access is charged the same toll.
We remind that the NDP consists in the seeking of a transportation network
supply configuration and demand flow pattern which jointly maximize a given
objective function of a social type while satisfying the equilibrium constraint.
The problem of designing the shape of the toll cordon is here formalized as
an NDP, where: Boolean design variables are utilized to represent the topology
of the cordon; the objective function is the Social Surplus, expressing in
monetary terms the social welfare; the behavioral constraint is a stochastic
equilibrium model. More specifically, on the demand side, random utility models
with elastic demand up to trip generation are employed, while, on the supply
side, congested networks with non-separable performance functions in multi-user
and multimodal context are utilized.
To solve the NDP an heuristic algorithm is presented based on the idea of an
iterative expansion of the charged-access area until no reduction of the objective
function can be achieved, where the optimality of each expansion, which is
limited to one node for iteration, is ensured by an exhaustive search among the
border nodes of the current charged-access area.
Finally, with reference to a real aggregated network, some results of the
proposed method are presented.

2 Problem formulation
The NDP considered in this paper can be formally expressed as follows:
max f, z S( f, z) (1)
s. to:
z∈Sz ; f ∈f UE(z)
where S( f, z) is the social surplus function, f is the arc flow vector, z is the
design variable vector, Sz is the feasible set of vector z and f UE(z) is the point-to-
set map of the equilibrium arc flow vectors.
The particular structure and complexity of the problem depends, on the
design variables and their feasible set, on how demand and supply are modeled
to formulate the equilibrium constraint and, finally, on the form of the objective
function, which are hence specified in the following.

2.1 The representation of the cordon

The cordon is essentially a cut set defined on the graph G = (N, A) representing
the multimodal network of infrastructures and services which constitutes the
transport supply. It consists then in a subset AZ of the arcs set A which, if
removed, “separates” a subset NZ of the nodes set N from the rest of the network.
As the algorithm which will be devised to solve problem (1) operates on the
node subset NZ, it is convenient to define also the cordon indirectly through the
identification of the set of nodes which it encloses.
If a node belongs to the set NZ it is internal to the cordon, else it is external to
the cordon. The cordon is then represented through a Boolean vector z , having
dimensions (|N| × 1) , whose generic component zi equals 1, if the corresponding
node i∈N is internal to the cordon (that is: i∈NZ), and equals 0 if this node is
external to the cordon.
In this paper the specific pricing scheme considered consists in charging a
toll to the access by private vehicle to a distinct area of the city, whose nodes are
separated from the rest of the road network by the cordon. Coherently, an arc
a∈A belongs to the cut set defined by the cordon if its tail TL(a)∈N is external to
the cordon while its head HD(a) ∈N is internal to the cordon. Formally, we then
have: AZ = {a∈AS : -zTL(a) +zHD(a) = 1}, where AS ⊆A is the subset of the road arcs.
Moreover the toll charged on any arc belonging to the cordon is here
assumed to be constant and equal to t.
Finally we assume that the charged-access area is connected, that is: between
any couple of nodes internal to the cordon there exists a path constituted by
nodes internal to the cordon linked by road arcs – the road arcs are assumed to be
bi-directional. The feasible set of the Boolean vectors z∈B representing the
cordon can be formally expressed as follows:
Sz = {z∈B: ∀ o, d ∈ N : zo +zd = 2 , ∃ (a1 , … , am) :
aj∈AR j = 1 , … , m ,
∑ j = 1 , … , m xTL(aj) = m ,
TL(a1) = o , HD(am) = d , HD(aj-1) = TL(aj) j = 2 , … , m } . (2)

2.2 The equilibrium model

In this paper, by making specific reference to persons’ trips, the equilibrium is

formalized as a fixed point problem, employing, on the demand side, behavioral
models with elastic demand based on random utility theory, and, on the supply
side, congested networks with non-separable arc performance functions in a
multi-user and multimodal context.
The users are grouped into homogeneous classes. The generic class u∈U ,
where U is the set of the classes considered, is a collection of N u > 0 users
identical to each other with respect to any individual characteristic influencing
the equilibrium.
In particular, they share the same choice set J u, made up of a positive finite
number of travel alternatives, among which one with maximum utility is chosen,
following the discrete choice analysis approach. The utility Uju of the generic
travel alternative j∈J u is the sum of a finite systematic utility term, Vju , and a
zero mean, non-zero finite variance random residual εju :
Uju = Vju +εju . (3)
The joint probability density function of these random residuals is assumed to
be independent of the systematic utilities, continuous and strictly-positive. We
refer to this random utility model as probabilistic, additive, continuous and
strictly-positive choice model. Moreover is assumed, as usual:
Vju = Xju -γ u⋅Cju j = 1, … , |J u| , (4)
where Xju and Cju synthetically expresses the positive utility associated with the
attributes characterizing the travel alternative j and its generalized costs,
respectively, while the positive scalar γ u is the marginal utility of the income.
The choice probability Pju of the generic travel alternative j∈J u is the
probability of j being the maximum utility travel alternative:
Pju = Pr[Uju = max k∈J u Uku] = Pr[Vju+εju ≥ Vku+εku ∀k∈J u] . (5)
The flow Fju of travel alternative j is then given by :
Fju = N u⋅Pju , (6)
while by definition it is:
∑j∈J u Fju = N u u = 1, … , |U| . (7)
The satisfaction W u is the mean value of the maximum utility:
W u = E[max k∈J u Vku+εku] . (8)
The generic travel alternative is associated to a path connecting the origin of
the trip to its destination through a specified sequence of links on the multimodal
network, which represents the transport supply. When the trip involves adaptive
choices (e.g. trips on the transit mode), the generic travel alternative is associated
to an hyperpath, instead. By choosing opportunely the form of the joint
probability density function of the random residuals, the correlations between the
travel alternatives available to the generic user can be specified so as to provide a
hierarchic level structure to the choice model. In that case, a travel alternative is
a path on a user choice tree, specifying the choice at each level: trip generation,
distribution, modal split and assignment. Then, the choice model considered is
capable to support any current elastic travel demand model.
In order to formalize the demand model, let us introduce the (|U| × 1) vector
W = (W 1, …, W u, …, W |U|)T and the vectors N and Γ having the same structure
as W , whose generic elements are N u and γ u, respectively. Furthermore, let us
introduce the (n × 1) vector V = (V 1 T, …, V u T, …, V |U| T)T , where n = ∑u∈U |J u|
and V u = (V1u, …, Vju, …, V|J u|u)T, together with the vectors X, C, P and F ,
having the same structure as V . Finally, let I e be the (n × |U|) matrix obtained
from I(|U|) replicating the generic u-th row |J u| times. The (4)-s, the (6)-s and the
(7)-s can be expressed in compact form as:
V = X -diag(I e⋅Γ )⋅C , (9)
F = diag(I e⋅N )⋅P , (10)
V = X -diag(I e⋅Γ )⋅C . (11)
The demand model is then formally expressed as:
F = diag(I e⋅N )⋅P(X-diag(I e⋅Γ )⋅C ) = F(C ) , (12)
and the satisfactions as:
W = W(X-diag(I e⋅Γ )⋅C ) = Ŵ(C ) , (13)
where the point-to-point map P(V ), called choice map, and the point-to-point
map F(C ), called demand function, expressing the variables P and F, are both C2
functions ranging in the sets SP, defined as {P∈ℜn: I e T⋅P = I(|U|), P ≥ 0} and SF,
defined as {F∈ℜn: I e T⋅F = N, F ≥ 0}, respectively, which are compact, convex
and not empty while the point-to-point maps W(V ) and Ŵ(C ), both expressing
the satisfactions through vector W , are C2 functions [2].
With reference to the generic arc a∈A and class u∈U , let cau and fau denote
the arc cost and the arc flow. The following relations hold:
Cju = Σa∈A cau⋅πaju j = 1, … , |J u| , u = 1, … , |U| ; C u = Π uT⋅c u u = 1, … , |U|;
C = Π T⋅c , (14)
fau = Σj∈Ju Fju⋅πaju a = 1, … , |A| , u = 1, … , |U| ; f u = Π u⋅F u u = 1, … , |U|;
f = Π ⋅F , (15)
where: πaju is the arc-hyperpath probability that the arc a is utilized by the users
belonging to the class u as an element of the hyperpath associated with the travel
alternative j ; Π u is the (|A| × |J u|) matrix whose elements are the πaju relative to
the class u ; Π is the (ν × n) block diagonal matrix, with ν = |A|⋅|U| , whose
generic block is matrix Π u ; c = (c1T, … , c uT, … , c|U| T)T is the (ν × 1) vector
whose generic component is the (|A| × 1) vector c u = (c1u , … , cau , … , c|A|u)T; f
has the same structure of c .
The congestion phenomenon is represented through the arc performance
function ĉ( f ), defined for non negative arc flows, which is here introduced
together with the arc cost function c( f , z) in order to separate the effect of the
toll, that is:
cau = cau( f , z) = ĉau( f ) +p(-zTL(a) +zHD(a)) ⋅t a = 1, … , |A| , u = 1, … , |U| , (16)
where p(x) is a step function, equal to 1 if x > 0 and equal to 0 elsewhere.
Using the (16) and the (15), the (14) becomes:
C = Π T⋅ĉ(Π T⋅F) +Π T⋅t(z) = Ĉ(F) +Π T⋅ t(z) = C(F, z) , (17)
where the generic component ta(z) of the vector function t(z) is p(-zTL(a) +zHD(a))⋅t.
In the following C(F, z) and Ĉ(F) are referred to as supply function and travel
alternative performance function, respectively.
The multi-user network representation based on class-specific arc costs and
flows here introduced, while useful when formalizing the equilibrium, becomes
unworkable when implementing its solution algorithm. To this end it is
convenient to represent the congestion phenomenon by means of an arc
generalized travel time vector s = (s1, …, sa, …, s|A|)T assumed dependent on an
arc equivalent total flow vector v = (v1, …, va, …, vA|)T:
s = s(v, z) . (18)
Specifically we assume:
cau = η u⋅sa a = 1, … , |A| , u = 1, … , |U| , (19)
va = ∑ u∈U ϑ u ⋅fau +ξ a a∈AS va = ∑ u∈U fau a∈[A-AS] , (20)
where: η u denotes the time unit monetary value for class u ; ϑ u is a parameter
expressing the relative weight on congestion of the vehicles used by class u
divided by its occupancy coefficient with respect to a reference vehicle; ξ a is an
auto-equivalent flow of transit vehicles, taking into account the effect on
congestion of the transit lines, if any, running on arc a∈AS .
From the (15) using the (12) and the (14) we get the network loading map:
f(c) = Π ⋅F(Π T⋅c) . (21)
Because the demand function is C2, the same holds for function f(c); moreover, it
ranges in Sf = { f ∈ℜν: f = Π ⋅F , F∈SF} which is a compact, convex and non-
empty set, because SF is so.
For any given value of the design variables z, a UE flow and cost pattern is
determined by solving one of the following fixed point problems:
f = f[c( f, z)] . (22)
With reference to the demand and supply model here considered, it is well
known that at least one UE pattern exists and that, if the arc cost function is
monotone non-decreasing, then, the UE pattern is unique.

2.3 The objective function

Under some mild assumptions, which are illustrated in [2], the social surplus is
given by:
S = ∑u∈U N u⋅W u /γ u -E -G +T , (23)
where E, G and T are, respectively, the monetary value of transport externalities
(environmental costs, accidents cost, …), the investment costs (operational costs
of transport infrastructures and services, network modification costs) and the toll
revenues.
The four terms of the (23) can be expressed, for the problem at hand, as:
∑u∈U N u⋅W u /γ u = [diag(N ) ⋅diag(Γ -1) ⋅Ŵ(C )] T⋅1 , (24)
E = E( f ) , (25)
G = Σa∈AS ga⋅p(-zTL(a) +zHD(a)) , (26)
T = t⋅Σu∈U Σa∈AS fau ⋅p(-zTL(a) +zHD(a)) , (27)
where ga expresses the costs of building and operating a cordon access on arc
a∈AS .

2.4 Formalization of the optimal cordon NDP

Using the (24), together with the (14) and (16), the (25), (26) and (27), to specify
the social surplus (23), the to specify the feasible set Sz and the (22) to express
the equilibrium, the NDP (1) becomes:
max f, z S( f, z) = [diag(N ) ⋅diag(Γ -1) ⋅Ŵ(Π T⋅c( f , z))] T⋅1(|U|) -E( f ) +
-Σa∈AS ga⋅p(-zTL(a) +zHD(a)) +t ⋅Σu∈U Σa∈AS fau ⋅p(-zTL(a) +zHD(a)) (28)
subject to (2) and f = f[c( f , z)].
In the following we assume that the fixed point problem f = f[c( f , z)]
formalizing the equilibrium has unique solution in correspondence of each
feasible vector z , that is: f UE(z) is a point-to-point function. This hypothesis
permits us to formalize the problem as an integer program:
max z S(f UE(z), z) = [diag(N ) ⋅diag(Γ -1) ⋅Ŵ(Π T⋅c(f UE(z), z))] T⋅1(|U|) +
-E(f UE(z)) -Σa∈AS ga⋅p(-zTL(a) +zHD(a)) +t ⋅Σu∈U Σa∈AS fau ⋅p(-zTL(a) +zHD(a)) (29)
s. to:
z∈{x∈B: ∀ o, d ∈ N : xo +xd = 2 , ∃ (a1 , … , am) :
aj∈AS j = 1 , … , m ,
∑ j = 1 , … , m xTL(aj) = m ,
TL(a1) = o , HD(am) = d , HD(aj-1) = TL(aj) j = 2 , … , m }

3 Solution Algorithm
Problem (29) can be solved by means of a standard integer programming
approach, or by means of a genetic algorithm. To this end it is necessary to
verify if a generic solution z is feasible, that is, if the corresponding charged-
access area is connected. In order to accomplish this task the following simple
procedure, based on an iterative elimination of nodes from Nz, can be utilized:

initialization
x=z,L=∅
select i∈N: xi = 1
xi = 0 , L = L +{i}

iteration
if L = ∅ then
if ||x|| = 0 then z∈Sz else z∉Sz
stop
select i∈L , L = L -{i}
∀a∈BS(i)
j = TL(a)
if xj = 1 then xj = 0 , L = L +{j}
goto iteration

It is worth noting that the evaluation of the objective function requires an

equilibrium assignment whatever the solution approach, implying an high
computational burden. Therefore in this work an heuristic approach is adopted,
where the feasibility of z doesn’t need to be verified. In the following an
algorithm is presented based on the idea of an iterative expansion of the charged-
access area until no reduction of the objective function can be achieved, where
the optimality of each expansion, which is limited to one node for iteration, is
ensured by an exhaustive search among the bordering nodes of the current
charged-access area, while feasibility is guaranteed if the initial charged-access
area is connected, since the expansion to bordering nodes preserves the
feasibility. In the following the solution procedure is outlined, denoting by
SN⊂N the node set corresponding to the initial charged-access area.

initialization
z = 0 , z* = z
S* = S(f UE(z), z)
L = {SN}

check the list

∀i∈L
zi = 1
S = S(f UE(z), z)
if S > S* then S* = S , z* = z
zi = 0
if z* = z then stop

build the list

z = z*
L=∅
∀i∈N: zi = 1
∀a∈BS(i)
j = TL(a)
if zj = 0 and j∉L then L = L+{j}
goto check the list

4 Numerical application
With reference to a real aggregated network, the proposed method has been
applied for increasing values of the toll cordon. On the basis of the numerical
result depicted in figures 1 and 2, we can state the following:
a) the local non-smooth shape of the surplus variation as a function of the
cordon toll reflects the intrinsic non continuity of the problem addressed, which
consists in a discrete topological optimization;
b) the local non-smoothness is however overcome by the overall concavity of
the surplus variation curve, which informs the nature of a correct design
approach: the cordon toll must be high enough to produce the desired path
changing and modal split effects, but not so high to generate a decrease of the
transportation supply as it is perceived by the users;
c) the dimension of the optimal charged-access area, expressed by the
number of its nodes, increases rapidly for low cordon tolls and then it reflects the
expected trade off between cordon toll level and dimension.
 Surplus Variation (%)
2,5

1,5

0,5

0
0 0,2 0,4 0,6 0,8 1
cordon toll (€)

Figure 1: Surplus variation owed to the optimal cordon.

Number of Nodes

12
10
8
6
4
2
0
0 0,2 0,4 0,6 0,8 1
cordon toll (€)
Figure 1: Number of nodes of the optimal cordon.

References
[1] Beckmann M., McGuire C., Wisten C. Studies in the Economics of
Transportation, Yale University Press, New Haven, CT, 1956.
[2] Bellei G., Gentile G., Papola N. Network Pricing Optimization in Multi-user
and Multimodal Context with Elastic Demand. Submitted to Transpn. Res.,
2000.
[3] Yang H. Sensitivity Analysis for the Elastic-Demand Network Equilibrium
Problem with Applications. Transpn. Res. 31B, 55-70, 1997.
[4] Ferrari P. La Regolamentazione delle Concessioni Stradali. Sistemi di
Trasporto 22, 7-16, 1999.
[5] Clune A., Smith M., Xiang Y. A Theoretical Basis for Implementation of a
Quantitative Decision Support System Using Bilevel Optimisation. Proc. of
the 14th International Symposium on Transportation and Traffic Flow
Theory, Jerusalem, Israel, 1999.