The competition game on hub network design

Cheng Chang Lin, Shwu Chiou Lee

Research output: Contribution to journalArticlepeer-review

33 Citations (Scopus)


In a competitive market, carriers in network industries design their hub networks and operations plans to maximize their respective profits. The long-term Cournot-Nash equilibrium steady state requires that none of the carriers may unilaterally alternate their hub networks or operations plans to increase profits. We study an integral-constrained game theoretic model for time-definite less-than-truckload freight services in an oligopolistic market. The research showed that carriers favor geographic central than outlying hub locations. With price-elastic demand in the freight market, the higher the network density is, the higher the profit is. Thus, the stable Cournot-Nash equilibrium solution states that all carriers respectively possess a similarly dense hub network, which is robust even with uneven changes in carrier cost structures. However, there is a prorogation effect in that an operating cost reduction will increase the individual carrier's and also the competitors' profits. The results also showed that there are cooperative equilibria that can make all carriers better off, but are unstable solutions in the non-cooperative game.

Original languageEnglish
Pages (from-to)618-629
Number of pages12
JournalTransportation Research Part B: Methodological
Issue number4
Publication statusPublished - 2010 May

All Science Journal Classification (ASJC) codes

  • Civil and Structural Engineering
  • Transportation


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