Revenue management under horizontal and vertical competition within airline alliances

Waldemar Grauberger and Alf Kimms

Omega, 2016, vol. 59, issue PB, 228-237

Abstract: We present a model to optimize a competitor׳s behavior in a network revenue management game within an airline alliance. In particular, we model two forms of competition; horizontal competition with parallel substitutable flights and vertical competition with both competitors operating adjacent connecting flights in a code sharing agreement. We compute pure Nash equilibria with an iterative algorithm presented in an earlier paper. A computational study shows that the algorithm is also suited for computing Nash equilibria taking both types of competition into account and that code sharing increases revenues for both competitors. However, the difference decreases as the network size and mean demand increase.

Keywords: Airline alliances network revenue management; Code sharing; Horizontal/vertical competition; Pure nash equilibrium (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

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DOI: 10.1016/j.omega.2015.06.010

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