Title

DEMAND-RESPONSIVE PRICING METHOD FOR THE PRODUCT LINE OF TAIWAN HIGH-SPEED RAIL

Authors

C-K Lee
T-H Tsai

Document Type

Journal Article

Publication Date

2004

Subject Area

ridership - demand, economics - pricing, mode - rail

Keywords

Taiwan, Pricing, High speed trains, Formosa, Demand responsive transportation, China (Republic : 1949- ), Case studies

Abstract

Presented is a demand-responsive pricing method for the product line of Taiwan high-speed rail. Considered are the objectives of both the operator and the passenger with their leader-follower and noncooperative relationships. The method is constructed by a bilevel program. A pricing model, which is the upper-level problem, considers three structures: basic model, market differential model, and product differential model. A demand model, which is the lower-level problem, considers service choice of passengers as a logit choice function where market competition is represented by a linear demand function and service capacity is used as a constraint for each service section. In a numerical study of three origin-destination pairs, presented are the results of the pricing models and their associated demand patterns. Convergence and sensitivity of model parameters are analyzed as well. The case study shows promising results for the flexibility and capability of the demand-responsive pricing method.