Fare Zone Assignment

Abstract: Tariff setting in public transportation networks is an important challenge. A popular approach is to partition the network into fare zones ("zoning") and fix journey prices depending on the number of traversed zones ("pricing"). In this paper, we focus on finding revenue-optimal solutions to the zoning problem for a given concave pricing function. We consider tree networks with $n$ vertices, since trees already pose non-trivial algorithmic challenges. Our main results are efficient algorithms that yield a simple $\mathcal{O}(\log n)$-approximation as well as a more involved $\mathcal{O}(\log n/\log \log n)$-approximation. We show how to solve the problem exactly on rooted instances, in which all demand arises at the same source. For paths, we prove strong NP-hardness and outline a PTAS. Moreover, we show that computing an optimal solution is in FPT or XP for several natural problem parameters.