Equilibria in networks

Hendricks, K., Piccione, M. and Tan, G. (1997) Equilibria in networks. Southampton, UK, University of Southampton (Discussion Papers in Economics and Econometrics 9717).


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We study a model in which two carriers choose networks to connect cities and compete for travelling customers. We show that if carriers compete aggressively (e.g., Bertrand-like behavior), one carrier operating a single hub-spoke network is an equilibrium outcome. Competing hub-spoke networks are not an equilibrium outcome, although duopoly equilibria in non-hub networks can exist. If carriers do not compete aggressively, a duopoly equilibrium in hub-spoke networks exists if the number of cities is not small. We provide conditions under which all equilibria consist of hub-spoke networks.

Item Type: Monograph (Discussion Paper)
Related URLs:
Subjects: H Social Sciences > HB Economic Theory
Divisions : University Structure - Pre August 2011 > School of Social Sciences > Economics
ePrint ID: 33191
Accepted Date and Publication Date:
January 1997Made publicly available
Date Deposited: 25 Jan 2008
Last Modified: 31 Mar 2016 11:59
URI: http://eprints.soton.ac.uk/id/eprint/33191

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