Nonlinear Tariffs and Freight Network Equilibrium

• Published in: Transportation science Vol. 28; no. 3; pp. 236 - 245
• Main Authors: Hurley, W. J, Petersen, E. R
• Format: Journal Article
• Language: English
• Published: Linthicum, MD INFORMS 01.08.1994; Transportation Science Section of the Operations Research Society of America; Institute for Operations Research and the Management Sciences
• Subjects: Algorithms; Applied sciences; Bulk carriers; Competition; Cost efficiency; Equilibrium; Exact sciences and technology; Freight; Ground, air and sea transportation, marine construction; Integrated systems; Marginal costs; Motor vehicle traffic; Non-linear models; Price efficiency; Pricing; Shipments; Tariffs; Transportation planning, management and economics; Two part tariffs; Urban traffic; Traffic management; Transportation network; Optimization; Freight transportation; Pricing; Origin destination model
• ISSN: 0041-1655; 1526-5447
• DOI: 10.1287/trsc.28.3.236

An equilibrium solution for the freight network problem is obtained. The system consists of multiple shippers and carriers, each acting as profit maximizing agents. The flow pattern maximizing total system profits is called the vertically efficient flows. We show that if the carrier or coalition of carriers use vertically efficient nonlinear pricing schedules, the vertically efficient flows are the equilibrium flows. The division of surplus associated with each shipment is obtained by solving a linear programming problem. Vertically efficient nonlinear tariff schedules are of a form that is commonly used in the transportation industry.