A Game-Theoretic Approach for Regulating Hazmat Transportation

Abstract

I n this paper, we study a novel toll setting policy to regulate hazardous material (hazmat) transportation, where the regulator (e.g., a government authority) aims at minimizing not only the network total risk but also at spreading the risk in an equitable way over a given road network. The idea is to use a toll setting policy to discourage carriers transporting hazmat from overloading portions of the network with the consequent increase of the risk exposure of the population involved. Specifically, we assume that the toll paid by a carrier on a network link depends on the usage of that link by all carriers. Therefore the route choices of each carrier depend on the other carrier's choices, and the tolls deter the carriers from using links with a high total risk. The resulting model is a mathematical programming with equilibrium constraints (MPEC) problem, where the inner problem is a Nash equilibrium problem (game) having as players the carriers, each one wishing to minimize his or her travel cost (including tolls); the outer problem is addressed by the government authority, whose aim is finding the link tolls that induce the carriers to choose route plans that minimize both the network total risk and the maximum link total risk among the network links (to address risk equity). To guarantee the stability of the solution, we study conditions for the existence and uniqueness of the Nash equilibrium, and propose a local search heuristic for the MPEC problem. Computational results are carried out on a real road network, comparing the performance of our toll setting policy with the toll setting approach proposed in the literature.

Methodological Advances and New Formulations for Bilevel Network Design Problems

“…To also distribute the risk fairly, Bianco et al (2009) introduced a bilevel model that not only minimizes the total risk in the network, but also the maximum risk over all arcs. This idea was also used in a game-theoretic approach for the fair distribution of risk by Bianco et al (2015). To calculate a Nashequilibrium, they used a local search heuristic not only to minimize the total risk but also to equilibrate the risk by looking at the maximum risk on an arc.…”

“…Even though some researchers already pointed out that risk equilibration needs to be considered (e.g. , so far only a few publications in this direction exist (Bianco et al, 2009(Bianco et al, , 2015. These ideas distribute the risk fair among arcs, but neglect that different transportation modes need to be considered.…”

Environmentally Responsible Supply Chains

“…Within the operations management (OM) literature, the transportation of hazardous materials is a well-studied problem (e.g., Bianco et al, 2015;Carotenuto et al, 2007;Erkut and Verter, 1998;Kara and Verter, 2004; for a review, see Erkut et al 2007). The main focus has been on the design of networks that minimize the risk associated with the transportation and storage of hazardous materials.…”

Routing for Hazardous Materials Transportation in Urban Areas

“…Xie et al proposed the multi-modal HAZMAT routing problem based on an integrated model consisting of practical constraints [7]. Furthermore, a game-theoretic approach for regulating HAZMAT transportation was developed [8]. Fan et al made an urban HAZMAT transportation model with road closure consideration to deal with traffic restrictions [9].…”