IDEAS home Printed from https://ideas.repec.org/a/eee/transe/v133y2020ics1366554519304107.html
   My bibliography  Save this article

Serial and parallel duopoly competition in multi-segment transportation routes

Author

Listed:
  • Kuang, Zhonghong
  • Lian, Zeng
  • Lien, Jaimie W.
  • Zheng, Jie

Abstract

We consider duopoly competition among transportation firms operating on a multi-segment route, and analyze the welfare consequences of different market structures in serial and parallel transport network structures. Travellers are concerned with both price and latency, and may opt to avoid travel in the system altogether if conditions are insufficiently attractive. Firms simultaneously set prices to maximize their own profits. We derive the traffic flow consequences of duopoly, monopoly, price-free, and socially optimal scenarios for both the serial and parallel structures, drawing comparisons regarding traffic flows, prices, and welfare. In extensions of the model, we consider firms’ operating costs, more than two firms, and hybrid market structures. The results point to a higher overall social welfare desirability of parallel competition along multi-segment transportation routes. Our study delivers important policy implications regarding the optimal route structure design.

Suggested Citation

  • Kuang, Zhonghong & Lian, Zeng & Lien, Jaimie W. & Zheng, Jie, 2020. "Serial and parallel duopoly competition in multi-segment transportation routes," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 133(C).
    • Handle: RePEc:eee:transe:v:133:y:2020:i:c:s1366554519304107
    DOI: 10.1016/j.tre.2019.101821
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1366554519304107
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.tre.2019.101821?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Nicholas Economides, 1997. "The Economics of Networks," Brazilian Electronic Journal of Economics, Department of Economics, Universidade Federal de Pernambuco, vol. 1(0), December.
    2. Xia, Wenyi & Zhang, Anming, 2016. "High-speed rail and air transport competition and cooperation: A vertical differentiation approach," Transportation Research Part B: Methodological, Elsevier, vol. 94(C), pages 456-481.
    3. van der Weijde, Adriaan Hendrik & Verhoef, Erik T. & van den Berg, Vincent A.C., 2013. "Competition in multi-modal transport networks: A dynamic approach," Transportation Research Part B: Methodological, Elsevier, vol. 53(C), pages 31-44.
    4. John Gunnar Carlsson & Mehdi Behroozi & Raghuveer Devulapalli & Xiangfei Meng, 2016. "Household-Level Economies of Scale in Transportation," Operations Research, INFORMS, vol. 64(6), pages 1372-1387, December.
    5. Alumur, Sibel A. & Yaman, Hande & Kara, Bahar Y., 2012. "Hierarchical multimodal hub location problem with time-definite deliveries," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 48(6), pages 1107-1120.
    6. Ted Klastorin & Hamed Mamani & Yong-Pin Zhou, 2016. "To Preannounce or Not: New Product Development in a Competitive Duopoly Market," Production and Operations Management, Production and Operations Management Society, vol. 25(12), pages 2051-2064, December.
    7. Ting Luo & Long Gao & Yalçın Akçay, 2016. "Revenue Management for Intermodal Transportation: The Role of Dynamic Forecasting," Production and Operations Management, Production and Operations Management Society, vol. 25(10), pages 1658-1672, October.
    8. de Rus, Ginés & Socorro, M. Pilar, 2014. "Access pricing, infrastructure investment and intermodal competition," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 70(C), pages 374-387.
    9. Lantz, Björn, 2009. "The double marginalization problem of transfer pricing: Theory and experiment," European Journal of Operational Research, Elsevier, vol. 196(2), pages 434-439, July.
    10. van den Berg, Vincent A.C., 2013. "Serial private infrastructures," Transportation Research Part B: Methodological, Elsevier, vol. 56(C), pages 186-202.
    11. Wen, Xin & Ma, Hoi-Lam & Choi, Tsan-Ming & Sheu, Jiuh-Biing, 2019. "Impacts of the Belt and Road Initiative on the China-Europe trading route selections," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 122(C), pages 581-604.
    12. Wei, Liqun & Zhang, Jianxiong & Dai, Rui & Zhu, Guowei, 2019. "Green flexible vs. inflexible capacity strategies for duopoly," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 122(C), pages 247-267.
    13. Zhang, Fangni & Graham, Daniel J. & Wong, Mark Siu Chun, 2018. "Quantifying the substitutability and complementarity between high-speed rail and air transport," Transportation Research Part A: Policy and Practice, Elsevier, vol. 118(C), pages 191-215.
    14. Hall, Jonathan D. & Palsson, Craig & Price, Joseph, 2018. "Is Uber a substitute or complement for public transit?," Journal of Urban Economics, Elsevier, vol. 108(C), pages 36-50.
    15. (Kevin) Park, Hyosoo & Chang, Young-Tae & Zou, Bo, 2018. "Emission control under private port operator duopoly," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 114(C), pages 40-65.
    16. Clark, Derek John & Jørgensen, Finn & Mathisen, Terje Andreas, 2014. "Competition in complementary transport services," Transportation Research Part B: Methodological, Elsevier, vol. 60(C), pages 146-159.
    17. V. V. Mazalov & A. V. Melnik, 2016. "Equilibrium Prices and Flows in the Passenger Traffic Problem," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 18(01), pages 1-19, March.
    18. Ghaderi, Abdolsalam & Burdett, Robert L., 2019. "An integrated location and routing approach for transporting hazardous materials in a bi-modal transportation network," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 127(C), pages 49-65.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yu, Xiaojuan & van den Berg, Vincent A.C. & Verhoef, Erik T. & Li, Zhi-Chun, 2022. "Will all autonomous cars cooperate? Brands’ strategic interactions under dynamic congestion," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 166(C).
    2. Zeng Lian & Jie Zheng, 2021. "A Dynamic Model of Cournot Competition for an Oligopolistic Market," Mathematics, MDPI, vol. 9(5), pages 1-18, February.
    3. Arkajyoti De & Surya Prakash Singh, 2022. "Analysis of Competitiveness in Agri-Supply Chain Logistics Outsourcing: A B2B Contractual Framework," Sustainability, MDPI, vol. 14(11), pages 1-33, June.
    4. Huang, Naqun & Lien, Jaimie W. & Zheng, Jie, 2023. "To acquire or compete? Government intervention in transportation under different route structures," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 172(C).
    5. Mohammad Tamannaei & Hamid Zarei & Sajede Aminzadegan, 2021. "A Game-Theoretic Approach to the Freight Transportation Pricing Problem in the Presence of Intermodal Service Providers in a Competitive Market," Networks and Spatial Economics, Springer, vol. 21(1), pages 123-173, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Huang, Naqun & Lien, Jaimie W. & Zheng, Jie, 2023. "To acquire or compete? Government intervention in transportation under different route structures," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 172(C).
    2. McHardy, Jolian & Reynolds, Michael & Trotter, Stephen, 2023. "A consumer surplus, welfare and profit enhancing strategy for improving urban public transport networks," Regional Science and Urban Economics, Elsevier, vol. 100(C).
    3. Xia, Wenyi & Jiang, Changmin & Wang, Kun & Zhang, Anming, 2019. "Air-rail revenue sharing in a multi-airport system: Effects on traffic and social welfare," Transportation Research Part B: Methodological, Elsevier, vol. 121(C), pages 304-319.
    4. Zhang, Rui & Johnson, Daniel & Zhao, Weiming & Nash, Chris, 2019. "Competition of airline and high-speed rail in terms of price and frequency: Empirical study from China," Transport Policy, Elsevier, vol. 78(C), pages 8-18.
    5. Bergantino, Angela Stefania & Madio, Leonardo, 2020. "Intermodal competition and substitution. HSR versus air transport: Understanding the socio-economic determinants of modal choice," Research in Transportation Economics, Elsevier, vol. 79(C).
    6. van den Berg, Vincent A.C. & Meurs, Henk & Verhoef, Erik T., 2022. "Business models for Mobility as an Service (MaaS)," Transportation Research Part B: Methodological, Elsevier, vol. 157(C), pages 203-229.
    7. Li, Siping & Zhou, Yaoming & Kundu, Tanmoy & Zhang, Fangni, 2021. "Impact of entry restriction policies on international air transport connectivity during COVID-19 pandemic," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 152(C).
    8. Jiang, Changmin & Wang, Kun & Wang, Qiang & Yang, Hangjun, 2022. "The Impact of High-Speed Rail Competition on Airline On-Time Performance," Transportation Research Part B: Methodological, Elsevier, vol. 161(C), pages 109-127.
    9. Blayac, Thierry & Bougette, Patrice & Laroche, Florent, 2024. "An analysis of intermodal competition and multiproduct Incumbent's strategies in the French market: What drive high-speed trains' prices and frequencies?," Transport Policy, Elsevier, vol. 156(C), pages 25-42.
    10. Thierry Blayac & Patrice Bougette & Florent Laroche, 2024. "An Analysis of Intermodal Competition and Multiproduct Incumbent’s Strategies in the French Market: What Drive High-Speed Trains’ Prices and Frequencies?," Post-Print halshs-04653778, HAL.
    11. Zhu, Feng & Wu, Xu & Cao, Chengxuan, 2021. "High-speed rail and air transport competition under high flight delay conditions in China: A case study of the Beijing-Shanghai corridor," Utilities Policy, Elsevier, vol. 71(C).
    12. Chen, Yuting & Fuellhart, Kurt & Grubesic, Tony H. & Zhang, Shengrun & Witlox, Frank, 2024. "An analysis of the context factors influencing the diverse response of airports to COVID-19 using panel and group regression," Transportation Research Part A: Policy and Practice, Elsevier, vol. 179(C).
    13. Li, Hongchang & Wang, Kun & Yu, Kemei & Zhang, Anming, 2020. "Are conventional train passengers underserved after entry of high-speed rail?-Evidence from Chinese intercity markets," Transport Policy, Elsevier, vol. 95(C), pages 1-9.
    14. Wang, Hua & Meng, Qiang & Zhang, Xiaoning, 2014. "Game-theoretical models for competition analysis in a new emerging liner container shipping market," Transportation Research Part B: Methodological, Elsevier, vol. 70(C), pages 201-227.
    15. McHardy, Jolian, 2024. "Platform business models and strategic price interaction," Transportation Research Part B: Methodological, Elsevier, vol. 182(C).
    16. Pengxia Shen & Ping Yin & Bingjie Niu, 2023. "Assessing the Combined Effects of Transportation Infrastructure on Regional Tourism Development in China Using a Spatial Econometric Model (GWPR)," Land, MDPI, vol. 12(1), pages 1-18, January.
    17. Gu, Hongyi & Wan, Yulai, 2022. "Airline reactions to high-speed rail entry: Rail quality and market structure," Transportation Research Part A: Policy and Practice, Elsevier, vol. 165(C), pages 511-532.
    18. Jiang, Mei & Jiang, Changmin & Xiao, Yi-bin & Wang, Chunan, 2021. "Air-HSR cooperation: Impacts on service frequency and environment," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 150(C).
    19. Rategh, Yalda & Tamannaei, Mohammad & Zarei, Hamid, 2022. "A game-theoretic approach to an oligopolistic transportation market: Coopetition between incumbent systems subject to the entrance threat of an HSR service," Transportation Research Part A: Policy and Practice, Elsevier, vol. 165(C), pages 144-171.
    20. Zhang, Anming & Wan, Yulai & Yang, Hangjun, 2019. "Impacts of high-speed rail on airlines, airports and regional economies: A survey of recent research," Transport Policy, Elsevier, vol. 81(C), pages 1-19.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:transe:v:133:y:2020:i:c:s1366554519304107. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/600244/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.