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A Game-Theoretic Approach to the Freight Transportation Pricing Problem in the Presence of Intermodal Service Providers in a Competitive Market

Author

Listed:
  • Mohammad Tamannaei

    (Isfahan University of Technology)

  • Hamid Zarei

    (Isfahan University of Technology)

  • Sajede Aminzadegan

    (Isfahan University of Technology)

Abstract

This article studies a competitive freight transportation pricing problem in the presence of two Intermodal Service Providers (ISPs) and a Direct Transportation System (DTS). The ISPs apply both rail and road transportation modes to carry the demands of a network of customers. The DTS uses only roads to carry the demands, without any transhipment at a distribution center. Each customer chooses its best transportation service based on the prices offered by the ISPs and the expenses of using the DTS. The ISPs determine their prices to maximize their profits, considering the customers’ choice behaviour. In order to determine the equilibrium decisions, a non-cooperative game-theoretic approach based on Stackelberg leader-follower competition is applied. Mixed-integer linear programming models are proposed to formulate this competition. A real-life case study is also conducted to demonstrate the validity of the models. We find that a barrier pricing strategy from the leader to deter the entrance of the follower ISP is not recommended for both of them because it may even lead to a negative value of profits for the leader. Finally, some sustainability objectives of the government, as the strategic decision maker, are examined. The results could help the government assess the effects of its policies on the transportation market, the environment, and the society.

Suggested Citation

  • 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.
    • Handle: RePEc:kap:netspa:v:21:y:2021:i:1:d:10.1007_s11067-020-09511-8
    DOI: 10.1007/s11067-020-09511-8
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    Cited by:

    1. 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.
    2. Baṣak Altan & Okan Örsan Özener, 2021. "A Game Theoretical Approach for Improving the Operational Efficiencies of Less-than-truckload Carriers Through Load Exchanges," Networks and Spatial Economics, Springer, vol. 21(3), pages 547-579, September.
    3. Mostafa Pazoki & Hamed Samarghandi & Mehdi Behroozi, 2023. "Increasing Supply Chain Resiliency Through Equilibrium Pricing and Stipulating Transportation Quota Regulation," Papers 2308.00681, arXiv.org, revised Oct 2023.
    4. Tamannaei, Mohammad & Zarei, Hamid & Rasti-Barzoki, Morteza, 2021. "A game theoretic approach to sustainable freight transportation: Competition between road and intermodal road–rail systems with government intervention," Transportation Research Part B: Methodological, Elsevier, vol. 153(C), pages 272-295.
    5. Ma, Mingyou & Zhang, Fangni & Liu, Wei & Dixit, Vinayak, 2022. "A game theoretical analysis of metro-integrated city logistics systems," Transportation Research Part B: Methodological, Elsevier, vol. 156(C), pages 14-27.

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