A competitive hub location and pricing problem

Exact solution of hub network design problems with profits

“…The entrant's profit is defined as the difference between the net revenue minus the fixed and variable costs. Contrary to Eiselt and Marianov (2009), in which customer's choice are represented using a gravity model, Lüer-Villagra and Marianov (2013) represent the customers' behavior using a logit discrete choice model which reflects customers' sensitivity to prices. When the customers' sensitivity to prices is low, they do not necessarily look for the route with the cheapest price which has been considered by Marianov et al (1999).…”

Designing a hub location and pricing network in a competitive environment

“…In 2013, Villagra and Marianov proposed a novel pricing and hub location problem, in case of having an existing transportation company and a new company who decides to enter the market through an incomplete hub network. The entrant maximizes his own profit by selecting the best hub locations and optimal prices [16]. To the best of our knowledge, the interaction between firms in competitive hub location and pricing problems has not been addressed in the literature.…”

Hub network design problems with profits

“…In this section we extend the primary model P O 1 to the case with multiple demand levels, and consider profit-oriented models where the above mentioned decisions are taken into account. The amount of price-dependent demand that is captured for each commodity, is usually modeled with various nonlinear continuous functions (see, for instance Lüer-Villagra and Marianov, 2013;OKelly et al, 2015). In this paper, to keep the model tractable while maintaining the rest of the decisions already considered, we employ a discrete approximation function that considers a set of possible values for commodities demands, each of them associated with a profit.…”