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The Sharing of Benefits from a Logistics Alliance Based on a Hub-Spoke Network: A Cooperative Game Theoretic Approach

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  • Minyoung Yea

    (Korea University Business School, Korea University, Seoul, Korea)

  • Seokhyun Chung

    (School of Industrial Management Engineering, Korea University, Seoul, Korea)

  • Taesu Cheong

    (School of Industrial Management Engineering, Korea University, Seoul, Korea)

  • Daeki Kim

    (Korea University Business School, Korea University, Seoul, Korea)

Abstract

This study investigates a strategic alliance as a horizontal cooperation in the logistics and transportation industries by considering various sharing rules with a cooperative game approach. Through forging a strategic alliance, carriers gain extra benefits from resource sharing and high efficiency resource utilization. In particular, our research focuses on the cost savings from using larger vehicles utilizing collective market demand and regarding them as benefits of cooperation. The model conceptualizes the characteristic function of cost savings by coalitions that take into account the hub-spoke network which is common in transportation services. To share the improved profits fairly between members, we use different allocation schemes: the Shapley value, the core center, the τ -value, and the nucleolus. By analyzing those cooperative game theoretic solutions employing an alliance composed of three carriers, we investigate whether satisfaction in this specific coalition provides an incentive for carriers to join such a coalition. Our results from the analysis, with respect to fair allocation schemes, provide a practical and academic foundation for further research.

Suggested Citation

  • Minyoung Yea & Seokhyun Chung & Taesu Cheong & Daeki Kim, 2018. "The Sharing of Benefits from a Logistics Alliance Based on a Hub-Spoke Network: A Cooperative Game Theoretic Approach," Sustainability, MDPI, vol. 10(6), pages 1-16, June.
    • Handle: RePEc:gam:jsusta:v:10:y:2018:i:6:p:1855-:d:150374
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