A Hotelling model with price-sensitive demand and asymmetric distance costs: The case of strategic transport scheduling

Harry Van Der Weijde, Erik T. Verhoef, Vincent A. C. van den Berg

Research output: Contribution to journalArticlepeer-review

Abstract

We analyse the scheduling decisions of competing transport operators, using a horizontal differentiation model with price-sensitive demand and asymmetric distance costs. Two competitors choose fares and departure times in a fixed time interval; consumers' locations indicate their desired departure times. Locations are chosen before prices; we show that the opposite order, like a simultaneous game, does not have a Nash equilibrium. We also discuss Stackelberg games and second-best regulation. Our results show how departure times can be strategic instruments. Services are scheduled closer together than optimal. Optimal regulatory strategies depend on commitment possibilities, and on the value of schedule delay.
Original languageEnglish
Pages (from-to)261-277
JournalJournal of Transport, Economics and Policy
Volume48
Issue number2
Publication statusPublished - May 2014

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