Plan Your System and Price for Free: Fast Algorithms for Multimodal Transit Operations

44 Pages Posted: 24 Jan 2022

See all articles by Siddhartha Banerjee

Siddhartha Banerjee

Cornell University - School of Operations Research and Information Engineering

Chamsi Hssaine

Cornell University - School of Operations Research and Information Engineering

Qi Luo

Clemson University, Department of Industrial Engineering

Samitha Samaranayake

Civil and Environmental Engineering

Date Written: November 26, 2021

Abstract

We study the problem of jointly pricing and designing a smart transit system, where the transit agency (the platform) controls a fleet of demand-responsive vehicles (cars) and a fixed line service (buses). The platform offers commuters a menu of options to travel between origin and destination (e.g., a direct car trip, a bus ride, or a hybrid combination of the two), and commuters make the utility-maximizing choice within this menu, given the price of each trip option. The goal of the platform is to determine the optimal set of trip options (modes) to display to commuters, the prices for these modes, and the design of the transit network in order to maximize the social welfare of the system. In this work, we tackle the commuter choice aspect of this problem, traditionally approached via computationally intensive bi-level programming techniques. In particular, we develop a framework that efficiently decouples the pricing and network design problem: given an efficient (approximation) algorithm for centralized network design without prices, there exists an efficient (approximation) for decentralized network design with prices and commuter choice. We demonstrate the practicality of our framework via extensive numerical experiments on a real-world dataset, in which we show the efficiency of pricing algorithm. We moreover explore the dependence of system welfare, revenue, and demand on transfer costs, as well as the cost of contracting with the on-demand service provider, and exhibit the welfare gains from a fully integrated mobility system.

Keywords: smart transit, pricing, network design

Suggested Citation

Banerjee, Siddhartha and Hssaine, Chamsi and Luo, Qi and Samaranayake, Samitha, Plan Your System and Price for Free: Fast Algorithms for Multimodal Transit Operations (November 26, 2021). Available at SSRN: https://ssrn.com/abstract=3972423 or http://dx.doi.org/10.2139/ssrn.3972423

Siddhartha Banerjee

Cornell University - School of Operations Research and Information Engineering ( email )

237 Rhodes Hall
Ithaca, NY 14853
United States

Chamsi Hssaine (Contact Author)

Cornell University - School of Operations Research and Information Engineering ( email )

Ithaca, NY 14853
United States

Qi Luo

Clemson University, Department of Industrial Engineering ( email )

227B Freeman Hall
Clemson, SC 29634
United States

Samitha Samaranayake

Civil and Environmental Engineering ( email )

Ithaca, NY 14853
United States

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