Passenger assignment and pricing strategy for a passenger railway transportation system

We investigate the railway passenger pricing problem in which a railway company adjusts its ticket prices to affect passengers' choices so that system's performance can be optimized. Passengers in the railway system make their traveling choices selfishly to minimize their generalized costs. To capture passengers' choices, a space-time expense network is generated according to published timetables, and a model based on the user equilibrium principle widely used in roadway traffic is developed. A descent direction-based heuristic is proposed to determine the optimal pricing scheme in an efficient manner. Numerical results demonstrate that the resulting pricing strategy can drive the system to its best performance by changing passengers' choices. Empirical results also show that a railway company only needs to modestly adjust its pricing structure to achieve optimal system performance.