IDEAS home Printed from https://ideas.repec.org/a/kap/netspa/v24y2024i4d10.1007_s11067-024-09654-y.html
   My bibliography  Save this article

Differential Multiplant Monopoly on a Freight Network

Author

Listed:
  • Terry L. Friesz

    (Pennsylvania State University)

Abstract

In this paper we give a mathematical statement of a differential spatial monopoly wherein transactions are facilitated by a freight transportation network that is based on an underlying graph. The monopolist has a presence at every node, and freight services are available for paths connecting stipulated origin-destination (OD) pairs. The monopolist produces a single homogeneous product that may be manufactured and inventoried, as well as sold, at every node. The dynamics take the form of ordinary differential equations that describe flow conservation. We present the necessary conditions of the monopolist’s optimal control problem and observe their interpretation is that marginal revenue equals marginal cost at each node for each instant of continuous time. Existence of an optimal solution to the monopolist’s problem is proven and a numerical example solved using two algorithms: one implemented in discrete time and the other in continuous time.

Suggested Citation

  • Terry L. Friesz, 2024. "Differential Multiplant Monopoly on a Freight Network," Networks and Spatial Economics, Springer, vol. 24(4), pages 763-788, December.
  • Handle: RePEc:kap:netspa:v:24:y:2024:i:4:d:10.1007_s11067-024-09654-y
    DOI: 10.1007/s11067-024-09654-y
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s11067-024-09654-y
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.

    File URL: https://libkey.io/10.1007/s11067-024-09654-y?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. repec:bla:jregsc:v:44:y:2004:i:3:p:489-515:2 is not listed on IDEAS
    2. Gul, Faruk & Sonnenschein, Hugo & Wilson, Robert, 1986. "Foundations of dynamic monopoly and the coase conjecture," Journal of Economic Theory, Elsevier, vol. 39(1), pages 155-190, June.
    3. Bensaid, Bernard & Lesne, Jean-Philippe, 1996. "Dynamic monopoly pricing with network externalities," International Journal of Industrial Organization, Elsevier, vol. 14(6), pages 837-855, October.
    4. Luca Lambertini & Raimondello Orsini, 2007. "Network externalities in a dynamic monopoly," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 15(1), pages 105-117, March.
    5. Terry L. Friesz, 2010. "Dynamic Optimization and Differential Games," International Series in Operations Research and Management Science, Springer, number 978-0-387-72778-3, July-Dece.
    6. Abdullah Dasci & Gilbert Laporte, 2004. "Location and Pricing Decisions of a MultiStore Monopoly in a Spatial Market," Journal of Regional Science, Wiley Blackwell, vol. 44(3), pages 489-515, August.
    7. repec:bla:jregsc:v:44:y:2004:i:3:p:489-515:1 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Paulo Maçãs Nunes, 2015. "Pricing Strategy In The Context Of Durable Goods Monopoly With Discrete Demand," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 60(204), pages 61-74, January –.
    2. Navarro, Noemí, 2012. "Price and quality decisions under network effects," Journal of Mathematical Economics, Elsevier, vol. 48(5), pages 263-270.
    3. Ngo Long, 2015. "Dynamic Games Between Firms and Infinitely Lived Consumers: A Review of the Literature," Dynamic Games and Applications, Springer, vol. 5(4), pages 467-492, December.
    4. Laussel, Didier & Van Long, Ngo & Resende, Joana, 2015. "Network effects, aftermarkets and the Coase conjecture: A dynamic Markovian approach," International Journal of Industrial Organization, Elsevier, vol. 41(C), pages 84-96.
    5. Cerquera Dussán, Daniel, 2007. "Durable Goods, Innovation and Network Externalities," ZEW Discussion Papers 07-086, ZEW - Leibniz Centre for European Economic Research.
    6. Mason, Robin, 2000. "Network externalities and the Coase conjecture," European Economic Review, Elsevier, vol. 44(10), pages 1981-1992, December.
    7. Yifan Dou & Yu Jeffrey Hu & D. J. Wu, 2017. "Selling or Leasing? Pricing Information Goods with Depreciation of Consumer Valuation," Information Systems Research, INFORMS, vol. 28(3), pages 585-602, September.
    8. Hoang, Nam H. & Vu, Hai L. & Lo, Hong K., 2018. "An informed user equilibrium dynamic traffic assignment problem in a multiple origin-destination stochastic network," Transportation Research Part B: Methodological, Elsevier, vol. 115(C), pages 207-230.
    9. Vincent Mak & Amnon Rapoport & Eyran J. Gisches & Jiaojie Han, 2014. "Purchasing Scarce Products Under Dynamic Pricing: An Experimental Investigation," Manufacturing & Service Operations Management, INFORMS, vol. 16(3), pages 425-438, July.
    10. James J. Anton & Gary Biglaiser, 2010. "Quality, Upgrades, and Equilibrium in a Dynamic Monopoly Model," Working Papers 10-36, Duke University, Department of Economics.
    11. James J. Anton & Gary Biglaiser, 2007. "Quality Upgrades and the (loss) of Market Power in a Dynamic Monopoly Model," Working Papers 18, Portuguese Competition Authority.
    12. Chung, Sung H. & Weaver, Robert D. & Friesz, Terry L., 2013. "Strategic response to pollution taxes in supply chain networks: Dynamic, spatial, and organizational dimensions," European Journal of Operational Research, Elsevier, vol. 231(2), pages 314-327.
    13. Mirta B. Gordon & Jean-Pierre Nadal & Denis Phan & Viktoriya Semeshenko, 2012. "Entanglement between Demand and Supply in Markets with Bandwagon Goods," Papers 1209.1321, arXiv.org, revised Dec 2012.
    14. Sandro Brusco & Hugo Hopenhayn, 2007. "Deregulation with consensus," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 32(1), pages 223-250, July.
    15. Qin, Cheng-Zhong & Yang, Chun-Lei, 2009. "An Explicit Approach to Modeling Finite-Order Type Spaces and Applications," University of California at Santa Barbara, Economics Working Paper Series qt8hq7j89k, Department of Economics, UC Santa Barbara.
    16. Edward Kutsoati & Jan Zabojnik, 2001. "Durable Goods Monopoly, Learning-by-doing and "Sleeping Patents"," Discussion Papers Series, Department of Economics, Tufts University 0105, Department of Economics, Tufts University.
    17. Tian Xia & Richard Sexton, 2010. "Brand or Variety Choices and Periodic Sales as Substitute Instruments for Monopoly Price Discrimination," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 36(4), pages 333-349, June.
    18. Walter Beckert, 2004. "Dynamic Monopolies with Stochastic Demand," Birkbeck Working Papers in Economics and Finance 0404, Birkbeck, Department of Economics, Mathematics & Statistics.
    19. Jullien, Bruno, 2001. "Competing with Network Externalities and Price Discrimination," CEPR Discussion Papers 2883, C.E.P.R. Discussion Papers.
    20. Bilancini, Ennio & Boncinelli, Leonardo, 2016. "Dynamic adverse selection and the supply size," European Economic Review, Elsevier, vol. 83(C), pages 233-242.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:netspa:v:24:y:2024:i:4:d:10.1007_s11067-024-09654-y. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.