This paper introduces a framework for joint hub network development. Building a joint physical hub for transhipment of goods is expensive and therefore involves considerable risks for the cooperating companies. In a practical setting, it is unlikely that an entire network will be built at once. Rather, the partners will have a more cautious attitude and build the hub facilities one-by-one. In the proposed framework, every time a new hub is introduced, partners will have the opportunity to decide whether or not they participate (and thus invest) in this network extension. The framework is also applicable in cooperative situations other than hub network development. In cases where multiple (infrastructural) investments have to be made by a consortium of logistics companies, the participants are likely to take advantage of a step-wise approach with gain sharing at intermediate steps. More specifically, the procedure can also benefit maintenance groups, warehouse sharing initiatives, and intermodal groups.
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Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number
2007-76.
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Find related papers by JEL classification: C61 - Mathematical and Quantitative Methods - - Mathematical Methods and Programming - - - Optimization Techniques; Programming Models; Dynamic Analysis C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
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