Mixed-logit network pricing

This paper addresses a network pricing problem where users are assigned to the paths of a transportation network according to a mixed logit model, i.e., price sensitivity varies across the user population. For its solution, we propose algorithms based on combinatorial approximations, and show that the smoothing effect induced by both the discrete choice and price sensitivity features of the model help in determining near-global solutions. This stands in contrast with simpler formulations where the main difficulty is due to the combinatorial nature of the problem. From an economic point of view, we provide an estimate of the proportion of revenue raised from the various population segments, an information that can be used for policy purposes. Copyright Springer Science+Business Media New York 2014