New formulations and valid inequalities for a bilevel pricing problem

Authors:
Sophie Dewez;Martine Labbé;Patrice Marcotte; Gilles Savard
Affiliations:
Université Libre de Bruxelles, Graphes et optimisation mathématique, Boulevard du Triomphe CP 210/01, 1050 Bruxelles, Belgium;Université Libre de Bruxelles, Graphes et optimisation mathématique, Boulevard du Triomphe CP 210/01, 1050 Bruxelles, Belgium;Université de Montréal, CRT and Département d'informatique et de recherche opérationnelle, C.P. 6128, succursale Centre-ville, Montréal, Qué., Canada H3C 3J7;ícole Polytechnique, GERAD and Département de mathématique et génie industriel, C.P. 6079, succursale Centre-ville, Montréal, Qué., Canada H3C 3A7
Venue:
Operations Research Letters
Year:
2008

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Abstract

Consider the problem of maximizing the toll revenue collected on a multi-commodity transportation network. This fits a bilevel framework where a leader sets tolls, while users respond by selecting cheapest paths to their destination. We propose novel formulations of the problem, together with valid inequalities yielding improved algorithms.