A Hotelling Model with Price-sensitive Demand and Asymmetric Distance Costs The Case of Strategic Transport Scheduling
Adriaan van der Weijde,
Erik Verhoef and
Vincent van den Berg
Journal of Transport Economics and Policy, 2014, vol. 48, issue 2, 261-277
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. © 2014 LSE and the University of Bath
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:tpe:jtecpo:v:48:y:2014:i:2:p:261-277
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