On the Complexity of the Highway Pricing Problem

Alexander Grigoriev, Joyce van Loon, Marc Jochen Uetz

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The highway pricing problem asks for prices to be determined for segments of a single highway such as to maximize the revenue obtainable from a given set of customers with known valuations. The problem is (weakly) NP-hard and a recent quasi-PTAS suggests that a PTAS might be in reach. Yet, so far it has resisted any attempt for constant-factor approximation algorithms. We relate the tractability of the problem to structural properties of customers' valuations. We show that the problem becomes NP-hard as soon as the average valuations of customers are not homogeneous, even under further restrictions such as monotonicity. Moreover, we derive an efficient approximation algorithm, parameterized along the inhomogeneity of customers' valuations. Finally, we discuss extensions of our results that go beyond the highway pricing problem.
Original languageUndefined
Place of PublicationEnschede
PublisherUniversity of Twente
Number of pages12
Publication statusPublished - Sept 2008

Publication series

NameCTIT Technical Report Series
PublisherCentre for Telematics and Information Technology, University of Twente
ISSN (Print)1381-3625


  • IR-64972
  • METIS-256456
  • EWI-13419

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