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Equilibria in networks

Equilibria in networks
Equilibria in networks
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.
9717
University of Southampton
Hendricks, K.
9f45510e-6e57-43ae-ae21-c3d5f61624a9
Piccione, M.
1acfdf34-f2fd-457e-8960-17f2fc8ef742
Tan, G.
79dd0478-2065-4732-998d-c76d10d7f453
Hendricks, K.
9f45510e-6e57-43ae-ae21-c3d5f61624a9
Piccione, M.
1acfdf34-f2fd-457e-8960-17f2fc8ef742
Tan, G.
79dd0478-2065-4732-998d-c76d10d7f453

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

Record type: Monograph (Discussion Paper)

Abstract

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.

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Published date: January 1997
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Identifiers

Local EPrints ID: 33191
URI: http://eprints.soton.ac.uk/id/eprint/33191
PURE UUID: 86c7c097-bbe7-452c-a6fc-5746077eb4ce

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Date deposited: 25 Jan 2008
Last modified: 11 Dec 2021 15:19

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Contributors

Author: K. Hendricks
Author: M. Piccione
Author: G. Tan

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