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Nonlinear Tariffs and Freight Network Equilibrium

Author

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  • W. J. Hurley

    (Department of Political and Economic Science, Royal Military College of Canada, Kingston, Ontario, Canada)

  • E. R. Petersen

    (School of Business, Queen's University, Kingston, Ontario, Canada)

Abstract

An equilibrium solution for the freight network problem is obtained. The system consists of multiple shippers and carriers, each acting as profit maximizing agents. The flow pattern maximizing total system profits is called the vertically efficient flows. We show that if the carrier or coalition of carriers use vertically efficient nonlinear pricing schedules, the vertically efficient flows are the equilibrium flows. The division of surplus associated with each shipment is obtained by solving a linear programming problem. Vertically efficient nonlinear tariff schedules are of a form that is commonly used in the transportation industry.

Suggested Citation

  • W. J. Hurley & E. R. Petersen, 1994. "Nonlinear Tariffs and Freight Network Equilibrium," Transportation Science, INFORMS, vol. 28(3), pages 236-245, August.
    • Handle: RePEc:inm:ortrsc:v:28:y:1994:i:3:p:236-245
    DOI: 10.1287/trsc.28.3.236
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    Cited by:

    1. Yang, Ruina & Yu, Mingzhu & Lee, Chung-Yee & Du, Yuquan, 2021. "Contracting in ocean transportation with empty container repositioning under asymmetric information," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 145(C).
    2. S. Rao & E. R. Petersen, 1998. "Optimal Pricing of Priority Services," Operations Research, INFORMS, vol. 46(1), pages 46-56, February.
    3. Chen, Yi-Ting & Sun, Edward W. & Chang, Ming-Feng & Lin, Yi-Bing, 2021. "Pragmatic real-time logistics management with traffic IoT infrastructure: Big data predictive analytics of freight travel time for Logistics 4.0," International Journal of Production Economics, Elsevier, vol. 238(C).
    4. Shuangyan Li & Yijing Liang & Zhenjie Wang & Dezhi Zhang, 2021. "An Optimization Model of a Sustainable City Logistics Network Design Based on Goal Programming," Sustainability, MDPI, vol. 13(13), pages 1-20, July.
    5. Fernández L., J. Enrique & de Cea Ch., Joaquín & O., Alexandra Soto, 2003. "A multi-modal supply-demand equilibrium model for predicting intercity freight flows," Transportation Research Part B: Methodological, Elsevier, vol. 37(7), pages 615-640, August.
    6. Mingzhu Yu & Ruina Yang & Zelong Yi & Xuwen Cong, 2020. "Contracting in Ocean Shipping Market Under Asymmetric Information," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 37(02), pages 1-24, March.
    7. Zhou, Wei-Hua & Lee, Chung-Yee, 2009. "Pricing and competition in a transportation market with empty equipment repositioning," Transportation Research Part B: Methodological, Elsevier, vol. 43(6), pages 677-691, July.
    8. Li, Xinyan & Xie, Chi & Bao, Zhaoyao, 2022. "A multimodal multicommodity network equilibrium model with service capacity and bottleneck congestion for China-Europe containerized freight flows," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 164(C).
    9. Shibasaki, Ryuichi & Ieda, Hitoshi & Watanabe, Tomihiro, 2005. "An International Container Shipping Model in East Asia and its Transferability," Research in Transportation Economics, Elsevier, vol. 13(1), pages 299-336, January.
    10. Luce Brotcorne & Martine Labbé & Patrice Marcotte & Gilles Savard, 2000. "A Bilevel Model and Solution Algorithm for a Freight Tariff-Setting Problem," Transportation Science, INFORMS, vol. 34(3), pages 289-302, August.
    11. Nagurney, Anna & Shukla, Shivani & Nagurney, Ladimer S. & Saberi, Sara, 2018. "A game theory model for freight service provision security investments for high-value cargo," Economics of Transportation, Elsevier, vol. 16(C), pages 21-28.
    12. Jin, Jie & He, Junliang & Wang, Xudong & Han, Chuanfeng & Meng, Lingpeng, 2024. "Contract design in ocean shipping market: A performance credit leveraged mechanism," International Journal of Production Economics, Elsevier, vol. 272(C).
    13. Ruina Yang & Chung-Yee Lee & Qian Liu & Song Zheng, 2019. "A carrier–shipper contract under asymmetric information in the ocean transport industry," Annals of Operations Research, Springer, vol. 273(1), pages 377-408, February.

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