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Revenue management under horizontal and vertical competition within airline alliances

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  • Grauberger, Waldemar
  • Kimms, Alf

Abstract

We present a model to optimize a competitor׳s behavior in a network revenue management game within an airline alliance. In particular, we model two forms of competition; horizontal competition with parallel substitutable flights and vertical competition with both competitors operating adjacent connecting flights in a code sharing agreement. We compute pure Nash equilibria with an iterative algorithm presented in an earlier paper. A computational study shows that the algorithm is also suited for computing Nash equilibria taking both types of competition into account and that code sharing increases revenues for both competitors. However, the difference decreases as the network size and mean demand increase.

Suggested Citation

  • Grauberger, Waldemar & Kimms, Alf, 2016. "Revenue management under horizontal and vertical competition within airline alliances," Omega, Elsevier, vol. 59(PB), pages 228-237.
    • Handle: RePEc:eee:jomega:v:59:y:2016:i:pb:p:228-237
    DOI: 10.1016/j.omega.2015.06.010
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    References listed on IDEAS

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    Cited by:

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    10. W. Grauberger & A. Kimms, 2018. "Computing pure Nash equilibria in network revenue management games," OR Spectrum: Quantitative Approaches in Management, Springer;Gesellschaft für Operations Research e.V., vol. 40(2), pages 481-516, March.
    11. Zhang, Qi & Wang, Wenyuan & Peng, Yun & Zhang, Junyi & Guo, Zijian, 2018. "A game-theoretical model of port competition on intermodal network and pricing strategy," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 114(C), pages 19-39.
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    14. Mehmet Onur Olgun, 2022. "Collaborative airline revenue sharing game with grey demand data," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 30(3), pages 861-882, September.
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