Costs associated with traffic externalities such as congestion, air pollution, noise, safety, etcetera arebecoming “unbearable”. The Braess paradox shows that combating congestion by adding infrastructuremay not improve traffic conditions, and geographical and/or financial constraints may not allowinfrastructure expansion. Road pricing presents an alternative to combat the mentioned externalities.The traditional way of road pricing, namely; congestion charging, may create negative benefits for thesociety and stakeholders, thus, defeating its main purpose (increasing transportation efficiency and socialwelfare). We study a road pricing that encompasses all the mentioned externalities. A meanwhilestandard approach to deal with conflicting objectives (externalities) are models from Multi-objectiveOptimization. This approach assumes that there is one leader stakeholder/decision-maker. But then,if more than one stakeholder participates in the road pricing, the concept of Nash equilibrium (NE)from economics may constitute an alternative model. Using game theoretic approach, we study andextend the single authority road pricing scheme (Stackelberg game) to a pricing scheme with multipleauthorities/regions (with likely contradicting objectives). Our model includes users interests in the upperlevel - giving a promising model that deals with user acceptability of road pricing. We investigatethe existence of NE among actors and prove that no pure NE exists in general. Then again, NE mayexist under special conditions. Since NE may not exist, and since competition may deteriorate thesocial welfare, we further design a mechanism that simultaneously induces a pure NE and cooperativebehaviour among actors, thus, yielding optimal tolls for the system.
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