Equity in network design and pricing: A discretely-constrained MPEC problem

Abstract

The transport market includes several players, public transport, ride-sourcing operators and travellers, interacting with each other and maximising their benefits. However, the market is characterised by a planning agency as the dominant player, making strategic decisions to regulate the market and affect the players' behaviours. This paper formulates and solves a Stackelberg game for a network-constrained transport system. The dominant player is the Stackelberg leader, and a network operator and travellers act as followers. As there is only one strategic player, the formulation is a mathematical program with equilibrium constraints (MPEC). To solve the problem, the MPEC is reformulated as a mixed-integer linear program (MILP) by using disjunctive constraints. The MILP formulation provides the opportunity to add discrete constraints to the original MPEC formulation with equilibrium constraints. We illustrate numerical experiments on a toy network in Sydney to highlight the capacity and capabilities of the model.

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