Baking and slicing the pie: An application to the airline alliance's profit-sharing based on cooperative game theory

Minyoung Yea, Daeki Kim, Taesu Cheong, Joon Moon and Sungho Kang

Journal of Air Transport Management, 2022, vol. 102, issue C

Abstract: Cooperating with competitors can be a mutually beneficial strategy for companies. To achieve continuous gains from the partnership, profit-sharing rules for the collective benefits are critical. This paper proposes a new allocation scheme that focuses on sustainable relationships based on cooperative game theory. Our min-variance solution deploys joint profits by minimizing the intent to form sub-groups, thus ensuring the alliance's stability. The min-variance is reasonable in a network collaboration where the preservation of the network itself is essential. By application to a numerical example of an airline joint venture, we examine the validity of the proposed distribution rule in the cooperation-allocation problem. The collective surplus of logistics collaboration is suggested by a mixed-integer programming model to solve the optimal value of combinations of the multi-commodity flow problem under the network shared. In addition, the results are interpreted by comparison with other solutions in cooperation game theory, such as the Shapley value, the τ–value, and the nucleolus. We offer further insights into changes in profit-sharing using a sensitivity analysis considering efficiency abatement.

Keywords: Profit sharing; Cooperative game theory; Logistics collaboration (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0969699722000400
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jaitra:v:102:y:2022:i:c:s0969699722000400

DOI: 10.1016/j.jairtraman.2022.102219

Access Statistics for this article

Journal of Air Transport Management is currently edited by Anne Graham

More articles in Journal of Air Transport Management from Elsevier
Bibliographic data for series maintained by Catherine Liu ().