Value of Dynamic Revenue-Maximizing Congestion

Pricing in a Highly Congested Corridor

John El Khoury 1 and F. Jordan Srour 2

Abstract: This paper examines the value of utilizing dynamic, revenue-maximizing, congestion pricing on a privately operated tolled route,
when the only alternative is a highly congested, public, free-access route. Three methods are specified by which revenue can be maximized—
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through the selection of a fixed percent of users to set the toll price for, through the selection of a fixed level of service on the toll road, and
through the use of a nonlinear optimization model. These methods are tested on a case study involving a highly congested corridor.
In simulation, the corridor’s flow rates are observed following the posting of a toll, the toll is updated, and the new flow observed until
a subsequent round of revenue maximizing is applied to the new conditions. It was concluded that in a highly congested corridor a dynamic,
revenue-maximizing toll can finance the construction of new capacity without degrading social welfare. DOI: 10.1061/(ASCE)TE.1943-
5436.0000798. © 2015 American Society of Civil Engineers.
Author keywords: Congestion pricing; Dynamic toll pricing; Managed lanes; Corridor management; Revenue maximizing tolls.

Introduction
Developing countries tend to suffer from what is termed premature
congestion (Gwilliam 2003). Premature congestion is characterized
by rates of car ownership exceeding the predicted rates seen in
developed nations based on the gross national income (GNI).
For example, in the United Kingdom, the rate of car ownership is
519 per 1,000 people, and the GNI per capita in international
dollars based on purchasing power parity is 38,160; in contrast,
car ownership in the developing country of Lebanon is 434 per
1,000 people, while the GNI is 17,400 (World Bank 2013). This
leads to high levels of congestion, as the rate of infrastructure
development or government investment in transport alternatives,
which requires tax revenue from income, lags behind vehicle
ownership, which is, of course, fueled by the lack of alternatives.
In many locations, this condition is further heightened by land use
patterns, such as urbanization, that encourage people to commute
into cities for economic opportunities.
In addition to the economics driving premature congestion, de-
veloping nations often suffer from a lack of coordination in policy
making and regulation (Gwilliam 2003). As a result, the private
sector is left to provide the necessary services. Of course, no private
entity will fund the construction of a highway without monetary
incentive. To that end, a strategy is presented for maximizing toll
revenues on a highly congested corridor in Lebanon.
The majority of road pricing studies focus on deriving toll prices
to manage congestion with the goal of maintaining a good system
wide level of service (LOS) (Hearn and Ramana 1998; de Palma
and Lindsey 2011). More recently, with the economic crises facing
many countries, models exploring the capability of setting tolls to
1
Dept. of Civil Engineering, Lebanese American Univ., P.O. Box 36,
Byblos, Lebanon (corresponding author). E-mail: john.khoury@lau.edu.lb
2
Dept. of IT and Operations Management, Lebanese American Univ.,
P.O. Box 13-5053, Chouran, Beirut 1102 2801, Lebanon. E-mail: jordan
.srour@lau.edu.lb
Note. This manuscript was submitted on February 2, 2015; approved on
June 16, 2015; published online on August 13, 2015. Discussion period
open until January 13, 2016; separate discussions must be submitted for
individual papers. This paper is part of the Journal of Transportation En-
gineering, © ASCE, ISSN 0733-947X/04015029(11)/$25.00.
recoup investment costs are gaining traction (Parry 2009; Zhao et al.
2010; Wang et al. 2011; Lindsey 2012; Chang and Hsueh 2006;
Hassan et al. 2013). This work introduces a strategy for dynami-
cally setting toll prices to maximize revenue. The proposed strategy
is studied under three different cases—fixing the percentage of
roadway users allowed onto the toll road, fixing the toll road
LOS, and dynamically optimizing toll prices to maximize revenue.
Before proceeding to describe the strategy for toll pricing, the
authors review the most relevant literature, highlighting how this
work differs from or extends the current body of knowledge. Sub-
sequently, the problem is defined and the nonlinear mathematical
program for maximizing revenue is introduced. Next, the capabil-
ities of the mathematical program applied to a case study on a
highly congested roadway in Lebanon are demonstrated. Then,
the results of this case study are presented. The paper concludes
with a discussion and directions for future research.
Relevant Literature
The literature on congestion pricing can be approximately divided
into two main categories: fixed and dynamic pricing. In fixed pric-
ing schemes, one price is set for a given time period and users adapt
their behavior accordingly (Verhoef et al. 1996; Yang and Huang
2004). In dynamic pricing, however, the toll is set in reaction to or
anticipation of roadway conditions (Dong et al. 2011). Within both
fixed and dynamic tolling strategies, different goals can govern the
setting of the prices. Chief among these goals are the goal to man-
age utilization and LOS across the network and the goal to maxi-
mize revenue.
As the literature on tolling to manage the utilization and LOS
across the network is substantial and not the main aim of this paper,
the remainder of this review is focused on research addressing the
goal of revenue maximization. Looking at the policy underlying a
revenue-maximizing strategy, Lindsey (2012) poses a series of four
questions about the social welfare implications of private tolling.
Specifically, Lindsey (2012) poses questions about the interplay
of cost recovery and demand management, the interplay of pricing
and road capacity, the interplay of pricing and public transportation
options, and the interplay of private investor/operator goals and

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 social welfare goals. Whereas the article provides an economic and
policy view on the field of toll pricing, it does not guide the devel-
opment of models for optimizing toll revenue.
Verhoef et al. (1996) were among the first to address the prob-
lem of second-best, one-route congestion pricing with an untolled
alternative and the goal of maximizing profit. The model of Verhoef
et al. (1996) yields a fixed toll price that is premised on an invariant
value of time (VOT) across roadway users. However, given a dis-
tribution of VOT in the population, the number of users would,
instead, be a function of the toll price. Despite this assumption,
Verhoef et al. (1996) demonstrate that using a revenue-maximizing
goal can have detrimental effects on the social welfare of road-
way users.
As a result of these poor social welfare implications, the trend in
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congestion pricing moved away from that of revenue maximization,
until the financial crisis of 2008. At that time, policy makers began
to realize that tolls may serve as a mechanism to recoup investment
costs or encourage public-private partnerships (Parry 2009). Fan
and Gurmu (2014) recognized that toll pricing and infrastructure
investment are fundamentally intertwined, as they propose a ge-
netic algorithm for the strategic problem of simultaneously decid-
ing on the extent of capacity expansion and the toll price. In
addition to simply recognizing that a single toll price can overcome
the cost of construction, other researchers have explored the inter-
play of both usage and access tolling. Specifically, Wang et al.
(2011) demonstrate that it is always profitable to implement an ac-
cess fee scheme with potentially the same effect on social welfare
as a usage fee structure. Given the assumed technology and policy
underlying their proposed system, these results are only instructive
in the setting of fixed tolls, but do not address the issue of dynamic
tolling.
Also in the context of fixed tolls, but with the goal of implement-
ing congestion pricing without detrimental social effects, a series of
articles examines what is known as Pareto-improving toll pricing.
In these schemes, the basic premise is to set the toll price and allow
for revenue redistribution, via refunds, such that no user is worse
off with the congestion pricing in place. Specifically, Guo and Yang
(2010), recognizing that the road users’ value of time influences
their travel behavior, prove that a Pareto-improving refunding
scheme exists if and only if the total system monetary travel dis-
utility is reduced. While this result is theoretically appealing, it is
practically impossible to administer refunds to roadway users
based on varying values of time. Therefore, Guo and Yang
(2010) also propose a single refund amount that is still Pareto im-
proving. Extending this work, Nie and Liu (2010) prove the exist-
ence of a self-financing, Pareto-improving congestion pricing
scheme when the VOT function is concave. This is significant
as such a scheme would allow the tolling authority to keep, rather
than redistribute, the net revenues. In keeping these funds, they may
reinvest the money in the infrastructure. Although, as the proposed
toll scheme is static, its applicability to the setting examined in this
paper is limited.
As far as is known, there are only two papers that address dy-
namic road pricing for revenue maximization (Chang and Hsueh
2006; Hassan et al. 2013). The earlier of the two works addresses
the need for profit maximization through the idea of a build-
operate-transfer arrangement for infrastructure development
(Chang and Hsueh 2006). Specifically, Chang and Hsueh (2006)
optimize toll revenues across a network of roads subject to equi-
librium constraints. However, given the complexity of optimizing
across multiple road links, they set the tolls based on an invariant
VOT. Although they do present empirical results across various as-
sumed levels of the VOT. In the more recent paper, Hassan et al.
(2013) address the issue of optimizing revenue through variations
© ASCE 04015029-2
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in allowable flow by using a predictive scheme to set the willing-
ness to pay parameters, which, in turn, dictate the level of utiliza-
tion on the toll road. The willingness to pay parameters, which are
iteratively estimated in a prediction module, serve to obfuscate
the need to estimate delays on the roadway. This is in contrast
to the presented work in which the delay savings toll users can ex-
pect are explicitly estimated.
Although the present work is closely related to that of Hassan
et al. (2013), this work assumes a simpler roadway structure of one
tolled and one untolled route. As such, the literature on dynamic
pricing for high occupancy toll (HOT) lanes is relevant. Gardner
et al. (2013) studied the effect of setting HOT prices to ensure
full utilization of the HOT lanes. They found that ensuring full uti-
lization requires a dynamic toll pricing scheme that is dependent on
the roadway user’s VOT. Extending this work to include the con-
cept of revenue maximization, Jang et al. (2014) examined the
effect on revenue of varying the effective capacity of the HOT lane.
They found, empirically on a case in California, that revenue is
maximized when the capacity of the toll lane is reduced by
300 vehicles=h. This study extends this work by dynamically man-
aging the effective capacity of the toll lane with the goal of revenue
maximization.
The presented work represents a contribution to the literature
along four lines. First, the reconcile the model of Jang et al.
(2014) is reconciled with that of Hassan et al. (2013) to provide
an objective function dependent only on estimations of delay and
a VOT function. Second, the versatility of the proposed objective
function in accommodating both reactive and anticipatory strate-
gies for pricing is shown. Third, the value of this optimization-
based strategy is demonstrated on a case study calibrated with
actual roadway traffic data and local, survey-based estimations
of the VOT. Finally, the authors present results indicating that in
a highly congested corridor dynamic revenue maximization can
serve to alleviate congestion without degrading social welfare.
Problem Definition and Formulation
Given a single route with both tolled and untolled options
(e.g., Verhoef et al. 1996), a dynamic toll price, πt , on the tolled
road in time t is set in order to maximize revenue. The untolled or
general purpose (GP) lanes have a capacity of CGP and in any time
period t may carry a volume of V GP t ≤ C . Similarly, the parallel
GP
toll road has a capacity of CT . However, to control the flow on
the toll road, a buffer is also specified, δ t , that reduces CT to an
effective capacity at time t: CET t ¼ C − δ t . The volume traveling
T
on the toll road in time t is V Tt . The total demand for the entire
system at time t is Dt .
Given this setting, the expression for revenue in time t is
Rt ¼ πt V Tt . In turn, πt is a function of the amount of money that
users are willing to pay for an hour of time relative to the total
amount of time that they can save by taking the toll road. Thus,
the expression for revenue can be expanded to Rt ¼ θt dt V Tt , where
θt represents the value associated with an hour of time as set in time
t to differentiate users, dt represents the delay that users of the toll
road can avoid (the difference between the delay on the GP lanes
and that on the toll lane), and V Tt is as before.
The value of θt can be derived from the constraints regarding the
capacity and volume of the toll road and the users’ VOT. Specifi-
cally, following the analysis of both Jang et al. (2014) and Hassan
et al. (2013), if the VOT is expressed as a cumulative distribution
function, then it can be inverted to find the value of θt . Although
both previous papers assume a logit structure for the CDF of the
VOT, this work leaves the function in a general form, FVOT ðθt Þ, and
J. Transp. Eng.
 shows how it can be manipulated to derive a nonlinear program for the calibration and use of this model on a highly congested stretch
maximizing revenue. of roadway in Lebanon are demonstrated.
Considering the constraints governing the effective capacity
and volume on the toll road, it is known, as in Jang et al. (2014),
that the effective capacity must be less than the total available Case Study
capacity on the toll road and greater than the demand wishing to
use the road. Symbolically, it can be written that CT − δ t ≥ CET While the simplicity of the model’s underlying structure of a single
t ≥
½1 − FVOT ðθt ÞDt . Manipulating these inequalities then 1 − ðCTt − route with tolled and untolled alternatives may seem unrealistic,
δ t Þ=Dt ≤ FVOT ðθt Þ. Now, in order to find θt , the inverse of given the topography of Lebanon’s coastline, it is actually reflective
FVOT ðθt Þ is taken, yielding the following toll price: of reality. Surrounded by mountains to the east and the Mediterra-
nean Sea to the west, Lebanon has a narrow coastal plain, which is
  225 km (139.8 mi) long. Beirut, the capital, is located in the center
CT − δ t
θt ≥ F−1
VOT 1 − ð1Þ of the north-south coastline. In 2000, the Greater Beirut area was
Dt
home to 1.3 million people (approximately one-third of the total
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country’s population). The northern city of Tripoli is the second

Placing this expression into the previous revenue expression largest in the country with an estimated population of 450,000.
yields the following mathematical program for maximizing Being the major employment center, Beirut attracts trips from
revenue: the suburbs as well as the nearby cities. Only one major arterial
  (A1 Highway) runs along the narrow coastline and connects Tripoli
CT − δ t
maxF−1
VOT 1− dt V Tt such that 0 ≤ δ t < CT ð2Þ (and other major cities like Byblos and Jounieh) to Beirut. Besides
δt Dt the unorganized minibus public/private service (with no dedicated
stops and no dedicated times), there are no other public transpor-
Clearly, the form of the model depends on the functional form tation alternatives, forcing the majority of people to use private
that FVOT ðθt Þ takes. If a binary or mixed logit model is assumed as cars. As a result, weekday commute traffic flow into the city is
in Hassan et al. (2013) or Jang et al. (2014), respectively, then this highly directional, with peak flows inbound in the morning hours
mathematical program becomes a concave, nonlinear program. and outbound in the evening hours.
The method used to estimate the expected difference in delay The cross section of the A1 Highway varies from two lanes per
between the GP and the toll lanes will also affect the form of direction to four lanes per direction. Although the concept of lim-
the mathematical program. If the delay in period t is assumed to ited access does not work in Lebanon, where highway control/
equal the delay in period t − 1, then dt can be taken from the sensor enforcement and traffic management is lacking, the A1 Highway
data. However, doing so will potentially yield a monotonically de- represents the road with the highest level of mobility and least ac-
creasing function. In turn, given the myopic nature of always maxi- cess in the country, and as such, is labeled a principal arterial. To
mizing the revenue in each period, without considering the future perform this study, a model of the most congested section of the A1
effect of that decision, the optimal solution will always occur by Highway, spanning 8.9 km (5.56 mi), was the basis of the simu-
setting the buffer to zero and opening all of the capacity on the toll lation. As shown in Fig. 1, the project limits extend from south of
road. As a result, the overall revenue will not be maximized. Thus, the Tabarja interchange to south of the Zouk interchange. Five main
it is better to use a mechanism to predict the effect of the buffer interchanges exist within the project limits, between which volume
selected in the current period on the delay that will be seen in future counts and speed data were collected.
periods. To that end, a Bureau of Public Roads (BPR)-type estima-
tion of the delay on both the GP and toll lanes is utilized. The fol-
VOT Calibration
lowing expression is obtained for the delay that users can avoid
assuming a free-flow time of T 0 : Both the theoretical definition of the VOT and its actual measure are
 4  T 4  crucial to the cost analysis, evaluation of alternatives, development
V GP
t Vt of pricing policies, and the modeling of travel demand and behavior
dt ¼ 0.15T 0 − ð3Þ in any transport project. In the cornerstone theory behind the VOT,
CGP CT
Becker (1965) assumes that time can be transferred freely between
Recognizing that the BPR function does capture the effect of the work and leisure. Thus, when some savings are achieved in travel
δ t term but does not capture the overall propagation of delay in the time, it can be used for added productivity at work. For that reason,
system, a set of values, γ t , that will be negative in the start of a peak most investment projects aim at saving travel time by reducing de-
period and positive toward the end is added to the function. This lay, increasing the average travel speed, and/or providing shorter
strategy serves to correct the BPR’s tendency to overestimate the route options (Small 2012); besides, of course those projects
delay in the time steps leading to the peak in demand and under- enhancing highway safety.
estimate delay in the time steps following the peak in demand. Being one of the most widely discussed concepts in the trans-
Furthermore, if it is assumed that the roadway users will select portation economics literature, the VOT has been noted to vary by
to use the toll road based on the toll that is set, then V Tt can be trip purpose, time of day, congestion levels, income, gender, and
replaced by CT − δ t. As a result, the objective of Eq. (2) is ex- family status, among other factors (Small and Verhoef 2007). It is,
panded to become hence, understandable that the literature revealed wide variations in
measures of the perceived VOT. Since the article by Lave (1969),
   GP 4  T   
CT − δ t Vt C − δt 4 several studies show that commute trips average approximately half
max.15F−1
VOT 1 − T 0 − þ γ t of the wage rate (Small and Verhoef 2007; Hensher and Greene
δt Dt CGP CT
2011). Furthermore, it is well documented in the literature that
× ðCT − δ t Þ such that 0 ≤ δ t < CT ð4Þ VOT increases under congested versus free-flow conditions by ap-
proximately 25% and up to 55% (Abrantes and Wardman 2011).
In Eq. (4), regardless of the form of FVOT ðθt Þ, the model is non- This is because drivers usually exert extra effort to safely navigate
linear and concave over the range of allowable values for δt. Now through congestion. Additionally, the VOT increases with the

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Fig. 1. Project limits along A1 Highway (image © Google, Data SIO, NOAA, U.S. Navy, NGA, GEBCO)

income level, exhibiting an income elasticity of the VOT, an
average of 0.5 [Shires and de Jong 2009; Gunn 2001; Strategic
Highway Research Program (SHRP 2) 2013] and was measured
by Abrantes and Wardman (2011) to reach 0.9. In fact, Borjesson
et al. (2012) find it tending to zero for low incomes and more than
1.0 for higher incomes.
Ultimately these factors can be captured in a cumulative distri-
bution function, FVOT ðθt Þ. This function represents the percentage
of the population that is willing to pay more than θt to save 1 h of
time. In this case study, a survey was conducted to derive the
functional form most descriptive of this region and user group
of interest. The survey follows a stated preference design. The
stated preference design serves to capture the users’ perceived
sense of time; the perceived sense of time is particularly relevant
to toll pricing as it is a user’s perception that will ultimately drive
their decision to use a toll lane or not.
The first part of the survey (Q1 through Q6) served to determine
the respondent’s use pattern and experience on the roadway seg-
ment in question. The second part (Q7 through Q11) focused on
assessing the respondent’s willingness to pay various fee levels
across various potential time savings; a question was also asked
to determine the respondent’s familiarity with the tolling concept.
Finally, the last set of questions (Q12 through Q14) served to solicit
the respondent’s demographics (age, income, and gender). At the
end of the survey, subjects were allowed to add their comments
related to the study and the proposed toll road. The survey could
be filled out in either English or Arabic.
As the primary goal of the survey is to estimate VOT, which is
continuous in nature, the sample size calculations were made ac-
cordingly. Specifically, with a desired confidence level of 95%, an
acceptable level of error of 250 Lebanese Lira (LL), and an esti-
mated standard deviation of 4,000LL (US$2.66), the target sample
size was 983. This sample size represents approximately 2% of the
target population—the users of the existing A1 Highway between
the Tabarja and Nahr El Kalb interchanges where commuter traffic
is estimated at 53,000 vehicles per day per direction (Council for
Development and Reconstruction 2011).
The survey was administered both online and as an intercept
survey at restaurants and service stations along the A1 Highway
within the study limits. The online survey was disseminated as
a link via e-mail to user lists at the Lebanese American University,
Byblos Bank, and Kunhadi (a roadway safety awareness organiza-
tion in Lebanon). The link to the survey was also published via the
Web page of a well-known TV anchor in Lebanon (on the Lebanese
Broadcasting Company Incorporated website). Regarding the sur-
veys conducted via intercept, a typical interview lasted anywhere
from 2 to 8 min, depending on the availability and the attentiveness
of the respondents. The interviewers targeted mainly coffee shops,

© ASCE 04015029-4 J. Transp. Eng.

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 grocery stores, restaurants, and gas stations within the project
limits.
The online survey was closed when the total number of re-
sponses from both the online and intercept surveys reached 1,219.
However, of those, 13 were left blank and were thus removed. Of
the remaining 1,206, 70 respondents claimed that they never trav-
eled the stretch of roadway in question. As such, they were re-
moved from the sample. A further 12 respondents did not provide
any data regarding their willingness to pay for various levels of
time savings and were also removed. Finally, given the use of social
media as a means for survey dissemination, the responses showed
a disproportionate number of young (18–24) respondents (63%).
As a result, a stratification process is utilized.
Recognizing that the surveys administered via intercept were
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more reflective of the age distribution of roadway users, the relative
proportions of those respondents were utilized to formulate a sam-
pling procedure among the remaining responses. Specifically, the
required sample strata sizes were identified, as follows: 39% age
18–24, 28% age 25–34, 28% age 35–55, and 5% older than 55.
To achieve this desired split, this study targeted, for culling, a group
of 286 respondents (25%) who reported being between 18 and
24 years old and traveled the roadway less than two times per week
or only 2–3 times per week. These respondents were likely stu-
dents, given the used sampling strategy. Thus, from this group,
152 responses were randomly selected to be removed; all responses
from the other age groups were included for analysis. While only
464 of the responses reflected regular travel on the roadway seg-
ment of interest, nearly all respondents were still able to provide
estimates on their willingness to pay for different levels of travel
time savings. This left a total of 972 responses for analysis.
The information on the respondents’ stated willingness to pay
relative to their expected time savings was particularly robust, as
each respondent provided information on their willingness to pay
for less than 10 min of savings, between 11 and 20 min, between 21
and 30 min, between 31 and 45 min, between 46 and 60 min, and
over an hour. The increments of 10 min at the low end of the scale
were smaller than at the high end (increments of 15 min) in order to
more accurately capture the respondents’ perception of time. For
example, it is much harder for a person to rationally assign a mon-
etary value to an amount of time less than 10 min, but much easier
to assign a value to an amount of time greater than a half hour. the
respondents’ estimated willingness to pay for each time length into
estimates of their value associated with 1 h was converted. For
example, if a respondent stated that they would pay 1,000LL
(US$0.66) to save less than 10 min on the road, this is equivalent
to being willing to pay 6,000LL (US$4.00) for 1 h.
Once the various values of time were assembled, a histogram
reflecting the empirical probability distribution function was con-
structed over price ranges of 1,000LL (US$0.66). From this prob-
ability density function (PDF), a cumulative distribution function
(CDF) was constructed and a distribution was selected for fitting.
The Weibull distribution was chosen to fit the data, as it showed the
best fit along with a functional form that allowed for scaling of
the currency term. Given the relatively large denominations seen
in the Lebanese Lira, with 5,000LL (US$3.33) serving as a com-
monly used bill, the presence of a scaling term in the CDF was
important. The exact expression of the VOT, obtained by fitting
the Weibull CDF was
FVOT ðθt Þ ¼ 1 − e−ðθt =7,309Þ
1.3
ð5Þ
On average, roadway users value their time at almost
8,000LL=h (US$5.33=h). This is consistent with the average wage
rate of almost 13,500LL=h (US$9=h), as reported on the survey.
© ASCE 04015029-5
J. Transp. Eng.
Thus, roadway users in Lebanon have a VOT that is almost 0.6
of their wage rate, which is consistent with values in the literature.
A graphical depiction of the empirical results and the fitted distri-
bution can be seen in Fig. 2.
Traffic Flow Calibration
Traffic data collection techniques primarily fall under three major
categories: site data, floating car data (FCD), and wide-area data.
Each of these methods provides different traffic data, accuracy, and
network coverage (Antoniou et al. 2008).
Given the lack of an organized traffic management center
(TMC), the absence of government and local agency support, vir-
tually nonexistent project specific funds, and no permanent vehicle
detection or count stations along the A1 Highway, the authors relied
on site data and FCD collected by a team of students. For the former,
manual counters and digital cameras were used at key locations
along the corridor—mainly between the main interchanges—to
collect peak hour traffic count data. Digital camera recordings were
later analyzed to obtain traffic counts at those locations. Peak hour
traffic counts were collected for 2-h periods in both peak periods
(7:00 to 9:00 a.m. and 4:00 to 6:00 p.m.). At each location, peak
hour traffic was counted for two days (some combination of
Tuesday, Wednesday, and Thursday) during the period from
September 2014 to December 2014. Counts were conducted outside
official or school holidays and during fair weather to eliminate
the effects of rainy days/storms, holidays, and weekend return/
departure occurring on Mondays and Fridays. Peak hour data
was also reported by direction and in 15-min increments [to obtain
the peak hour factor (PHF)]. Midday and off-peak hour traffic counts
were also collected. Those counts were conducted for only one day
during the week, which was based on the availability of the student
assistants to be onsite. The accumulation of the hourly data: peak, mid-
day, and off-peak, helped provide a daily distribution of traffic counts.
Truck counts/percentages were collected during midday and off-peak
hours only, as trucks are not allowed to operate during the commute
peak hours per government regulations. The location of the digital cam-
era was selected to be at a vantage point where a long stretch of the road
was captured. This allowed for the capture of the traffic densities in
each of the hours analyzed—and specifically the jam densities.
In addition to traffic count data, speed data was collected using
two methods. The first method was based on the video recordings at
Fig. 2. Empirical PDF and CDF with fitted Weibull CDF
J. Transp. Eng.
 the key locations along the corridor. More than one digital recorder
was used simultaneously, which allowed tracking signature ve-
hicles as they crossed the key locations. Signature vehicles were
randomly selected vehicles having noticeable color, make, or fea-
tures. The digital cameras’ clocks were synched to allow time
tracking of such signature vehicles. Noting the time when a signa-
ture vehicle passed each of the marked locations, and knowing the
constant distance between the marked locations, the vehicle run-
ning speed was computed using the space-mean-speed equation,
Ū s ¼ l=t̄, where Ū s is the space mean speed, l is the length of
section analyzed, and t̄ is the average travel time needed to cross
the given length (Ross 1991).
In the second method, the FCD was used to collect average
operating speeds within the corridor. At random times during week-
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days, students, and colleagues timed their trips between marked
locations within the 8.9 km section of the corridor. Again, using
the equation above, the speed was computed per the analyzed hour.
Timed trips were conducted by multiple roadway users and during
various morning and evening hours in both directions of the A1
Highway within the project limits.
Finally, 24-h traffic count and speed data for the southbound
direction were marked at the key locations within the project study
limits. Corridor average speed and flow curves were computed and
are plotted in Fig. 3. The figure demonstrates the well-defined peak
in the southbound direction (into Beirut) during the morning peak
period, which lasts from 6:30 to 9:30 a.m. Traffic jams in the south-
bound direction during morning hours (similarly in the northbound
direction during p.m. hours) stretch for kilometers and last for
hours, causing enormous pollution problems, driver frustration
and stress, lost productivity and a significant waste of fuel. The
flow, speed, and travel time data was used to calibrate the simula-
tion model as discussed in next section.
CORSIM Calibration Process
A fundamental aspect of the toll lane operations is the determina-
tion of which toll price and corresponding traffic volume are ap-
propriate at any given time, and at what point it is necessary to
change the tolling scheme to maintain high efficiency within the
toll lane. Because the toll lanes do not actually exist, a microscopic
simulation model was used to assess operations on the existing GP
lanes and the proposed toll lane. The modeling requirements for the
toll lane analysis included:
Fig. 3. Southbound A1 Highway—corridor average hourly speed and
flow
© ASCE 04015029-6
J. Transp. Eng.
• Capturing the prevailing traffic patterns within the corridor;
• Estimating flows that will use the toll lane;
• Replicating geometric features of the GP and the toll lanes;
• Verifying traffic flows and speeds at various sections within the
GP and toll corridors; and
• Testing the model sensitivity to varying parametric and geo-
metric changes.
A variety of microscopic traffic models are capable of modeling
freeway operations (including lane changes and weaving), static
and dynamic route assignment, user group/vehicle classification
features, and toll lane operation. For practical reasons, the selected
model should be able to present the results of the simulation in such
a way that descriptive statistics can be easily generated (Depart-
ment of Transportation, Federal Highway Administration 2002).
The traffic software integrated system (TSIS)/corridor simulation
(CORSIM) tool, which was readily available, was used to assess
traffic operations within the freeway corridor. Using CORSIM,
the geometry and flow of the existing A1 Highway corridor were
modeled.
At first, a working model of the existing corridor, termed the
base model, was compiled using default CORSIM values. However,
such values cannot be expected to capture operations along the A1
Highway, whose human and physical attributes are totally different
than those seen in the U.S. Thus, the calibration of the model was a
crucial step in replicating local conditions, including driver behav-
ior, lane capacities, and speed/flow profiles (Hourdakis et al. 2003).
The objective of the calibration process, which was entirely based
on Chapter 5 of Calibration of the Traffic Analysis Toolbox Volume
IV: Guidelines for Applying CORSIM Microsimulation Modeling
Software, was to find the set of parameter values for the model that
best reproduces local traffic conditions (Holm et al. 2007). The first
step included calibrating the capacity of the GP lanes at key bottle-
necks within the corridor. Three major bottlenecks were identified
within the 8.9 km section of the A1 Highway, the first at the lane
reduction at Ghazir bridge (reduction from three to two lanes), the
second at the heavy merge section from the high-volume Jounieh
on-ramp with no acceleration lane, and the third at the diverge to
Kaslik interchange which eliminates a freeway lane with the off-
ramp (reduction from 3 to 2 lanes). Because the capacity of the
downstream bottleneck was controlling the two upstream bottle-
necks, it was used for calibration. Additionally, a 10 × 10 O-D
matrix was developed for the base model to better match flows
at the off-ramps throughout the corridor.
Three global parameters were systemically adjusted to calibrate
the model output. Those include the car following sensitivity
factor, the Pitt car following constant, and the percent of drivers
yielding the right-of-way (ROW) for lane changing drivers attempt-
ing to merge ahead. Based on Zhang and Holm (2004), those
parameters were most influential in modifying freeway capacity.
The car following sensitivity factor was adjusted from a default
mean of 0.8 s to a mean of 1.05 s. It represents the primary factor
in calculating the desired time headway (in seconds) between a
leader-follower pair. Increasing this value reduces freeway capac-
ity, which is commensurate with reality of the A1 Highway oper-
ations. The Pitt car following constant was also changed to 1.5 m
(5 ft) instead of a default value of 3.05 m (10 ft) to better represent
the local driving habits (drivers following very closely). Finally, the
percent of drivers yielding the ROW parameter was changed to 60%
instead of the 20% default value, as drivers tend to be more aggres-
sive in lane changing forcing other drivers to yield. There are other
parameters related to the lane changing logic within CORSIM;
however, altering these parameters is typically not worthwhile be-
cause they are not very sensitive to aggregate measures (i.e., 15-min
averages) of throughput (Zhang and Holm 2004). To determine the
J. Transp. Eng.
 number of model runs needed, the sample size equation, n ¼
½ðzα=2 Þ2 × σ2 =E2 was used, where zα=2 is 1.96 for 95% confidence
level, the sample variance, σ, is conservatively taken to be 1=2, and
the desired margin of error, E, is assumed to be 10%, knowing that
“due to the stochastic nature of CORSIM results from individual
runs can vary by 25% and higher standard deviations may be ex-
pected for facilities operating at or near capacity” (Holm et al.
2007). Although the required number of runs was found to be
29, the base model was run in excess of 50 times before adopting
the final values of the three parameters.
The base model was calibrated for three main parameters, which
are flow (vehicles=h), speed (km=h), and average travel time during
the peak hour. The results of the calibration are shown in Table 1.
Field measured flow, speed, and travel time data were compared
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with the base model values at three bottleneck locations within
the corridor limits. The overall corridor average travel time per ve-
hicle during the peak hour (7:00 to 8:00 a.m.) using the model was
approximately 28.4 min, which matches the timed measurements
through the corridor (average of 29 min). The measured free-flow
travel time is approximately 7 min compared with 6.9 min output
using the base model.
Because the calibration targets were met, the model represents a
close match to current field conditions. The base model was then
revised to include the toll lanes (one lane per direction) parallel to
the current GP lanes. The toll lanes ingress and egress points were
assumed at locations where ROW/space permits gantry locations.
Finally, the capacity of the corridor was set at 4,000 vehicles=h
on the GP lanes based on observed maximum flow just downstream
of the south-most bottleneck (between the Kaslik and Zouk
interchanges). This value defines the corridor’s maximum flow
under prevailing conditions. As for the toll lanes, a maximum
capacity of 1,800 vehicles=h was assumed to maintain good
LOS at all times (Department of Transportation, Federal Highway
Administration 2002). Finally, the corridor demands were projected
10 years into the future with average annual growth of 4%, given
the widespread housing developments and the influx from neigh-
boring countries due to security issues, leading to an overall aver-
age increase of 43% over current traffic flows, which would also
capture induced demand on this corridor.
Simulation Structure
The simulation structure that was used is similar to that of Gardner
et al. (2013). Specifically, a series of linked spreadsheets with calls
to the CORSIM traffic simulator were used to implement the fol-
lowing seven steps:
1. Initialize: Set t ¼ 0 and the volumes on the toll and the GP
lanes according to an initial buffer of 0 (δ 0 ¼ 0). Set the toll
price to 500LL (US$0.33) as there will not be any delay ex-
perienced in the first period of simulation;
2. Run the roadway simulation for the length of one time step;
3. Calculate the revenue found in time t based on the actual vo-
lumes recorded on the toll road in time t;
4. Increment the time step, set t ¼ t þ 1;
Table 1. Measured versus Modeled Flow, Speed, and Travel Time at Three Bottlenecks within the Study Corridor
Flow (vehicles=h)
Cumulative
Bottleneck location distance (km) Field Model Difference (%)
Maameltein bridge 1.9 3,560 3,725 5 10
Jounieh on-ramp 4.2 3,970 4,025 1 10
Kaslik off-ramp 7.1 4,165 4,055 −3
© ASCE 04015029-7
J. Transp. Eng.
5. Optimize the buffer, δ t by solving Eq. (4) with the volume on
the GP lanes estimated according to the forecast model in
operation and the demand of the system assumed from historic
data;
6. Based on the buffer set in Step 5, calculate πt using Steps 1 and
3; and
7. If t < T, increment t and return to Step 2. Otherwise, terminate.
As the simulation structure recalculates the toll at every time step,
the length of the time step should be chosen in compliance with any
regulations on the frequency of toll price changes. In the analyzed
case, the authors selected 15 min as a default time step. The simu-
lation is run incrementally to avoid losing the dynamics from pre-
vious time steps. That is, every time the simulation is run for a
specific time step, the previous time steps were run again to account
for the cumulative effects of operations within the corridor.
The presented simulation is also dependent on a forecast of the
volume on the GP lanes in Step 5. To study the effect of this fore-
cast, three different forecasting methods were examined. The first,
termed reactive, in which the volume in time t was set to the vol-
ume in time t − 1. The second, termed anticipatory, in which the
volume on the GP lanes in time t was set to be the demand antici-
pated in time t minus the observed volume on the toll road in time
t − 1. Finally, the third, termed exact, assumes that the volume on
the GP lanes in time t will be the anticipated demand minus the
exact volume on the toll road for which the toll price was set. That
t ¼ Dt − ðC − δ t Þ. In this case, the volume
is, in the third case, V GP T
on the GP lanes becomes dependent on the decision variable δ t .
Finally, use of the BPR function in Eq. (4) requires the addition
of the terms γ t to correct for the influence of delay propagation.
These terms were calibrated by studying the difference between
the expected and actual delay witnessed at various levels of δ t fixed
across the peak period. These differences were then averaged in
each time period and the average was used as the γ t value. This
yielded values for the adjustor term, γ t , ranging from −0.1 to
−0.8 in the time steps leading up to the peak in demand and values
ranging from 0.2 to 1.1 in the periods following the peak in de-
mand. Using the mean absolute percent error (MAPE) between
the actual delay (measured using the CORSIM model) and the fore-
casted delay using the BPR function, it was found that, on average,
the addition of the γ t values improved the delay estimation by 44%
for the dynamic forecasting methods. On average, the delay MAPE
was reduced from 57% difference by only using the BPR function
to 32% difference when adding the γ t values.
Once the volume on the GP lanes is forecast and the BPR es-
timation of delay adjusted, the nonlinear program, represented in
Eq. (4), is rapidly solved by any commercially available, off-
the-shelf solver. In the presented case, it was found that the
built-in nonlinear solver of Excel could capably solve the model.
Results
For the sake of comparison, the authors define two models: the base
model and the untolled lane model. The base model represents
existing conditions while the untolled lane model assumes the
Average speed (km=h) Average travel time (min)
Field Model Difference (%) Field Model Difference (%)
13 30 11 9 −12
12 20 23 22 −6
34 38 12 27 26 −5
J. Transp. Eng.
 Table 2. Summary of Results across Scenarios
Network throughput Average speed Total delay Average delay Average travel Total revenue
Analyzed scenario (vehicles=km) (km=h) (vehicles=h) (min=km) time (min) (US$)
Base model 115,071 31.4 2,205.5 1.15 17.8 0
Untolled lane 152,998 56.7 877.2 0.35 11.4 0
Fixed price point, US$6 142,377 42.2 1,657.6 0.70 12.4 8,247
Fixed buffer, 700 vehicles=h 144,285 40.3 1,839.7 0.76 13.4 9,771
Reactive 136,121 37.9 1,920.3 0.85 14.4 8,384
Anticipatory 139,182 38.3 1,934.3 0.83 15.4 12,833
Exact 130,364 35.4 2,065.1 0.95 16.4 16,091

addition of one untolled lane per direction with the same capacity the percentage split between the toll lane and GP lane users fixed.
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of the envisioned toll lanes. For all scenarios, only the morning
peak period (3 h from 6:30 to 9:30 a.m.) is analyzed as the after-
noon peak behaves similarly, but in the opposite direction. Besides,
the a.m. peak is a more defined peak than the p.m. peak, which is
observed to have a more prolonged duration and hence a little
milder. It was found that the base model, averaged across the
3 h of the modeled period, allows a throughput in vehicle kilo-
meters of 115,071, whereas the untolled lane model allows
152,998 vehicles=km; an improvement of 33%. The average speed
across the 3-h period in the base model is 31.4 km=h, whereas that
in the untolled lane model is 56.7 km=h; an improvement of 81%.
Total delay over the three hours also improves by 60% with a delay
of 2,205.5 vehicles=h in the base model versus 887.2 vehicles=h in
the untolled lane model. Finally, the average travel time, across the
3-h period, on the main GP lanes (not the additional lanes) is
17.8 min in the base model versus 11.4 min in the untolled lane
model. These results are summarized with the full set of results
in Table 2. The base model shows the nature of highly congested
GP lanes given the demand projected for the next 10 years. The
addition of the untolled lane provides significant operational ben-
efits by reducing delay and increasing throughput and average
speed. Even with the addition of one toll lane per direction and
the shown operational improvements, it is anticipated that the min-
imal-induced demand will be generated due to the highly congested
corridor. Despite the lane addition, the corridor capacity remains
below demand levels. Of course, the addition of the lanes requires
substantial capital investment that may only be possible with toll-
ing. As such, the attention is now turned to the primary results of
this study.
First, the results associated with keeping the price point, θt , that
differentiates users fixed is explored. This has the effect of keeping
Given the VOT in the project population, the total revenue curve is
found to be concave relative to θt with the maximum revenue of US
$8,247 for the morning peak period occurring at a price point of
9,000LL (US$6). Fig. 4(a) depicts these results graphically. In con-
trast, a maximum revenue can be gained, for the morning peak
period, of US$9,771 by fixing the buffer on the toll road, δ t , to
700 vehicles=h. This level reduces the effective capacity of the toll
road to 1,100 vehicles=h. Thus, the tolling authority is better off
selecting a LOS for the toll road, and fixing that LOS in terms of
a buffer, than selecting a percent of drivers to defer to the toll road.
This result is consistent with that of Jang et al. (2014). Fig. 4(b)
depicts these results graphically.
In contrast to the scenarios above where the price point or buffer
is fixed, there are three scenarios where δt is the decision variable of
a revenue-maximizing optimization. Specifically, the objective
function in Eq. (4) was used to set the toll price in each time step.
The element differentiating these three scenarios is the method by
which the volume on the GP lanes is estimated. Figs. 5(a–c) illus-
trate how δ t changes across the time steps of the simulation relative
to the revenue realized in each of those time steps for the reactive,
anticipatory, and exact methods of forecasting the volume on the
GP lanes.
From these results, it can be seen that forecasting the volume on
the GP lanes by using volume data from the previous time step
(reactive), puts a lag in setting the buffer that reduces the revenue
seen in the early periods of the simulation. Once the peak demand
hits approximately 8:00 a.m., the buffer begins to decrease with a
steady increase in revenue. The total revenue in the reactive case is
US$8,384, which is less than that found in using a fixed buffer
strategy. In contrast, using information about the expected demand
in the next time step coupled with actual toll lane volume data from

(a) (b)

Fig. 4. (a) Total revenue curve relative to different fixed price points, θt ; (b) total revenue curve relative to different fixed buffers, δt

© ASCE 04015029-8 J. Transp. Eng.

J. Transp. Eng.
Downloaded from ascelibrary.org by Cambridge University on 08/16/15. Copyright ASCE. For personal use only; all rights reserved.

(a) (b)

(c)

Fig. 5. (a) Changes in δt and total revenue across the time periods of simulation for the reactive method; (b) changes in δt and total revenue across the
time periods of simulation for the anticipatory method; (c) changes in δ t and total revenue across the time periods of simulation for the exact method

the previous step has the effect of holding the buffer within a range
between 750 and 1,000 vehicles=h. This results in total revenue of
US$12,833. The fact that this range is consistent with the revenue-
maximizing, fixed buffer level of 700 is not surprising. In the exact
case, where the volume on the GP lanes is predicted from expected
demands and assumed toll lane volumes, the buffer begins high in
order to increase delay on the GP lanes while capitalizing on a toll
set to attract elite drivers; as the delay on the GP lanes increases
through the peak period, the buffer is reduced to capitalize on
the volume of drivers wishing to access the toll road. As a result,
in the exact case, the total revenue seen in the peak period is US
$16,091. These results imply that if the data regarding roadway
volumes can be accurately forecast, the dynamic optimization strat-
egy can serve to increase revenue substantially. Furthermore, with
revenues of US$16,091 per morning peak, revenues of US$126 mil-
lion can potentially be gained over the span of 15 years assuming
that the afternoon peak would be tolled similarly.
Of course, the drive to maximize revenues should not be done at
the expense of the traveling public. Table 2 summarizes a variety of
social welfare metrics across all scenarios. In these results it is
found that opening additional capacity in a highly congested cor-
ridor is the best option (the untolled lane case), as it allows for the
maximum throughput. However, without the capability to finance
such capacity a toll must be instituted. To that end, the tolling strat-
egies show that degrading the average speed, over the untolled lane
case, to 42.3 km=h with a total delay of 1,657.6 vehicles=h, by
using a fixed price point of US$6, can bring total revenue of US
$8,247 in the morning peak period. Of course, if a private toll author-
ity wishes to maximize revenue at the expense of the traveling pub-
lic, then a total revenue of US$16,091 can be made in the morning
peak while travelers will experience a total of 2,065.1 vehicles=h of
delay and an average speed of 35.4 km=h—this case represents only
a 6% decrease in total delay compared with the base model, but im-
proves total corridor throughput, over the case with no additional
roadway (the base model), by 13%, which is a measurable improve-
ment. The willingness of users to pay for a toll under the exact strat-
egy regime could be questioned when the level of delay in vehicle
hours is comparable to the base case. However, the level of delay
specified here is total delay—which is mostly contributed to by
the delay seen on the GP; toll road users see negligible delay.
In contrast to the dynamic strategies, the reason behind the
strong performance of the fixed price point strategy in terms of
throughput is the fact that revenue maximization occurs when delay
savings are at their highest on the toll road. Thus, in keeping the toll
road for elite users both the willingness to pay and the delay savings
remain high.
Discussion
In this paper, the authors demonstrated that a dynamic toll strat-
egy designed to maximize revenue can effectively allow the tolls

© ASCE 04015029-9 J. Transp. Eng.

J. Transp. Eng.
 collected to pay for the infrastructure investment. However, if a
proper LOS is desired on the GP lanes as well, then a simpler toll-
ing strategy that fixes the percent of users to divert to the toll road
relative to a price point associated with their VOT is the best strat-
egy. In such a strategy, the government would need to subsidize
the construction of the roadway in order to recover the costs. Never-
theless, understanding the effect of revenue-maximizing, dynamic
tolls on both revenue streams and LOS is important for policy
makers.
Moreover, when selecting a dynamic tolling strategy from the
three strategies presented in this paper, the tolling authority should
carefully consider the information requirements that each strategy
bears. The Reactive strategy requires the tolling authority to have
the capacity to capture, in real time, the volume of users on both the
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tolled and GP lanes. The anticipatory strategy requires both the
capability to capture roadway conditions and to mathematically
forecast the number of users on the GP lanes in the next time step.
Finally, the exact case requires the tolling authority to capture road-
way conditions and accurately forecast demand on both the GP and
toll lanes. If the capability of forecasting demand accurately is de-
graded, then the level of revenue from dynamic tolling will also
likely be degraded. Furthermore, if implementing the appropriate
hardware and software solutions to institute dynamic tolling is too
costly, then the benefit of the exact strategy revenue will not be
realized as profits.
In addition to the investment in real-time roadway monitoring
technology, proper toll management implies posting the travel
times and toll prices well in advance of the toll road entrance. Such
technology is widely applied and would be feasible to install.
Beyond the simple posting of the travel times and toll prices,
whether drivers would behave rationally relative to this information
could be speculated. In the fixed price or fixed buffer cases, having
drivers select the toll lane in numbers less than forecast would
cause an increase in congestion on the GP lanes and a reduction
in revenues on the toll lane. If, instead, drivers select the toll lane
in numbers greater than forecast, then the toll road might experi-
ence some congestion and higher revenue—although with higher
congestion on the toll lane, it is expected that the more price
sensitive users would revert to the GP lanes until the proposed
equilibrium was reached. The effect of misjudging the driver
behavior relative to the posted travel times and toll prices is miti-
gated by the dynamic strategies. In these strategies, the continual
monitoring of roadway conditions allows for the response to un-
expected driver behavior in real time through the increase or de-
crease of toll prices.
This study is not without its limitations. First, the simulation
assumes that the toll lanes exist and that the traveling public will
choose to use the toll lane relative to the derived VOT. Of course,
the decision to use the toll lanes may be governed by other factors
than simply VOT—users may wish to pass by certain stores or visit
specific town centers on their way to and from work, thus forcing
them to use the GP lanes. Second, the toll prices were set based on
the expected delay that toll users can avoid. Estimating this delay
was done by using the BPR function, a function with known lim-
itations. Chief among those limitations is the fact that in the BPR
function, volume drives the expected delay in any one period.
However, in reality, delay propagates thus making the actual delay
lower initially and higher in later periods. While an attempt was
made to correct for this shortcoming by the use of adjustor terms,
using other models of delay may yield a more universally appli-
cable optimization model. Third, only the morning commute peak
period was modeled. As the A1 Highway is the only corridor along
the coast, peaks are common on the weekends when city dwellers
visit homes in the mountains or in the summer when beach goers
© ASCE 04015029-10
J. Transp. Eng.
swarm to the coast. It is well known that the purpose of the trip can
influence the VOT—as such, tolling during these leisure-related
peaks may yield very different results.
Acknowledgments
The authors gratefully acknowledge the Lebanese American
University’s School of Engineering Research Council for support
of this research.
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