Pricing equilibrium of transportation systems with behavioral commuters

Abstract

We study Wardrop equilibrium in a transportation system with profit-maximizing firms and heterogeneous commuters. Standard commuters minimize the sum of monetary costs and equilibrium travel time in their route choice, while "oblivious" commuters choose the route with minimal idle time. Three possible scenarios can arise in equilibrium: A pooling scenario where all commuters make the same transport choice; A separating scenario where different types of commuters make different transport choices; A partial pooling scenario where some standard commuters make the same transport choice as the oblivious commuters. We characterize the equilibrium existence condition, derive equilibrium flows, prices and firms' profits in each scenario, and conduct comparative analyses on parameters representing route conditions and heterogeneity of commuters, respectively. The framework nests the standard model in which all commuters are standard as a special case, and also allows for the case in which all commuters are oblivious as the other extreme. Our study shows how the presence of behavioral commuters under different route conditions affects equilibrium behavior of commuters and firms, as well a the equilibrium outcome of the transportation system.