Hub Arc Location with Competition

In this paper, we consider the design of large-scale hub-and-spoke transportation networks in a competitive environment. We adopt the hub arc location model that locates arcs with discounted transport costs connecting pairs of hub facilities. Two firms compete for customers in a Stackelberg framework where the leader firm locates hub arcs to maximize its revenue, given that the follower firm will subsequently locate its own hub arcs to maximize its own revenue. Several mechanisms are presented to allocate traffic between the two firms based on the relative utility of travel via the competing hub networks. Results with up to three hub arcs for each competing firm show the role of a competitive environment in designing transportation systems. key words: Hub location, competition, transportation, Stackelberg

[1]  Sibel A. Alumur,et al.  Network hub location problems: The state of the art , 2008, Eur. J. Oper. Res..

[2]  Andreas T. Ernst,et al.  Hub Arc Location Problems: Part II - Formulations and Optimal Algorithms , 2005, Manag. Sci..

[3]  Frank Plastria,et al.  Discrete models for competitive location with foresight , 2008, Comput. Oper. Res..

[4]  Gilbert Laporte,et al.  Sequential location problems , 1997 .

[5]  Vladimir Marianov,et al.  Location of hubs in a competitive environment , 1999, Eur. J. Oper. Res..

[6]  M. O'Kelly,et al.  A quadratic integer program for the location of interacting hub facilities , 1987 .

[7]  Hasan Pirkul,et al.  New formulations and solution procedures for the hop constrained network design problem , 2003, Eur. J. Oper. Res..

[8]  Frank Plastria,et al.  Static competitive facility location: An overview of optimisation approaches , 2001, Eur. J. Oper. Res..

[9]  Andreas T. Ernst,et al.  Hub location problems , 2002 .

[10]  James F. Campbell.  Hub location for time definite transportation , 2009, Comput. Oper. Res..

[11]  S. Hakimi.  On locating new facilities in a competitive environment , 1983 .

[12]  Nicole Adler,et al.  Hub-and-spoke network alliances and mergers: Price-location competition in the airline industry , 2007 .

[13]  Concepción Román,et al.  ANALYZING COMPETITION FOR HUB LOCATION IN INTERCONTINENTAL AVIATION MARKETS , 2004 .

[14]  Gilbert Laporte,et al.  Competitive Location Models: A Framework and Bibliography , 1993, Transp. Sci..

[15]  Andreas T. Ernst,et al.  Hub Arc Location Problems: Part I - Introduction and Results , 2005, Manag. Sci..

[16]  Bernd Wagner.  A note on "Location of hubs in a competitive environment" , 2008, Eur. J. Oper. Res..

[17]  A. Volgenant,et al.  Facility location: a survey of applications and methods , 1996 .

[18]  M. Fukushima,et al.  STACKELBERG HUB LOCATION PROBLEM , 2001 .

[19]  Mihiro Sasaki.  HUB NETWORK DESIGN MODEL IN A COMPETITIVE ENVIRONMENT WITH FLOW THRESHOLD , 2005 .

[20]  D. Serra,et al.  Market capture by two competitors: The pre-emptive location problem , 1994 .

[21]  Barrett W. Thomas,et al.  Network design for time‐constrained delivery , 2008 .

[22]  Vladimir Marianov,et al.  A conditional p-hub location problem with attraction functions , 2009, Comput. Oper. Res..