Incorporating budgets and central preferences into VCG for multi-regional network design

Determine a principled method to integrate the budget constraints of both regional operators and the central organization into a Vickrey–Clarke–Groves (VCG)-based mechanism for multi-regional transportation network design, and to incorporate the central organization’s preferences into the project selection rule so that resource allocation remains efficient and implementable in practice.

Background

The paper studies a hierarchical multi-stakeholder transportation network design problem, with self-interested regional operators at the lower level and a central organization at the upper level. To foster cross-region cooperation and maximize social welfare, the authors propose an iterative VCG-based mechanism that selects infrastructure projects and determines payments, including possible subsidies from the central organization.

In discussing prior work and gaps, the authors note that while the VCG mechanism is promising for efficient resource allocation, adapting it to real-world multi-regional contexts presents challenges. Specifically, classical formulations do not directly address the budget constraints of both operators and the central organization or incorporate the central organization’s preferences into project selection—issues the authors flag as unclear and motivating their framework.