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Serial and parallel duopoly competition in multi-segment transportation routes

Author

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  • Kuang, Zhonghong
  • Lian, Zeng
  • Lien, Jaimie W.
  • Zheng, Jie

Abstract

We consider duopoly competition among transportation firms operating on a multi-segment route, and analyze the welfare consequences of different market structures in serial and parallel transport network structures. Travellers are concerned with both price and latency, and may opt to avoid travel in the system altogether if conditions are insufficiently attractive. Firms simultaneously set prices to maximize their own profits. We derive the traffic flow consequences of duopoly, monopoly, price-free, and socially optimal scenarios for both the serial and parallel structures, drawing comparisons regarding traffic flows, prices, and welfare. In extensions of the model, we consider firms’ operating costs, more than two firms, and hybrid market structures. The results point to a higher overall social welfare desirability of parallel competition along multi-segment transportation routes. Our study delivers important policy implications regarding the optimal route structure design.

Suggested Citation

  • Kuang, Zhonghong & Lian, Zeng & Lien, Jaimie W. & Zheng, Jie, 2020. "Serial and parallel duopoly competition in multi-segment transportation routes," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 133(C).
    • Handle: RePEc:eee:transe:v:133:y:2020:i:c:s1366554519304107
    DOI: 10.1016/j.tre.2019.101821
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