Analysis of the time-varying pricing of a bottleneck with elastic demand using optimal control theory

In this paper, a time-varying pricing model of a road bottleneck with elastic traffic demand is formulated using the optimal control theory. It is assumed that the optimal use of the bottleneck is achieved when social benefit over the whole time horizon of study is maximized. The necessary conditions for optimal solution are derived and their economic interpretations are given. Different from conventional analyses, queuing is not pre-assumed to be zero when obtaining the optimal time-varying toll, and the exit capacity of the bottleneck is assumed either to be constant or to vary with queue length. An approximate iterative algorithm is proposed for solving the model in a discrete time version. Three numerical examples are presented to demonstrate the applications of the proposed model and algorithm.