1.201
/
11.545
/
ESD.210
Transportation Systems
Analysis:
Demand
and
Economics
Assignment 4
Question
1
Pricing
a
Trucking
Service
A
small
trucking
company
serves
two
OD
pairs
as
represented
in Figure
1.
Assume
that
daily
costs
are
represented
by
the
following
function:
C
=
100
+
5
Y
1
+
3
Y
2
−
0.001
Y
1
Y
2
Furthermore,
demand
at
each OD
pair
is
given by:
Y
1
=
50
−
P
1
Y
2
=
25
−
2
P
2
where
Y
i
is
in tons/day,
P
i
is
in $/ton,
and
C
is
in
$/day.
Y
1
Y
2
Figure
1
:
The
network
served
by
the
trucking
company
Answer
the
following
questions:
a.
Find
the
fares
that:
i.
maximize
social
welfare
ii.
maximize
profit
iii.
maximize
social
welfare
subject
to
no
losses
(note:
this
will
require
the
use
of
the
Excel
or
other
numerical
solver)
Compare
and
discuss
your
results.
b.
Assume
that
cost
complementarity
between both flows
is
zero
(i.e.
the
cost
C
=
100
+
5
Y
1
+
3
Y
2
function is
).
Calculate
the
new
optimal
fares
for
each
case
in
(a)
and
discuss
the
differences
in your
results
(between (a)
and
(b)).
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View Full DocumentQuestion
2
The
Use
of
Pricing
to
Control Flow
on
Urban
Expressways
Travel
on
urban
expressways
can
be
described
by
the
following
simple
linear
relationship
between the
actual
speed
at
which traffic
flows
(
S
,
measured
in miles
per
hour)
and
the
flow
of
traffic
(
Q
,
measured
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 Fall '08
 MosheBenAkiva
 TA

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