2008
DOI: 10.1287/opre.1080.0617
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Joint Design and Pricing on a Network

Abstract: To optimize revenue, service firms must integrate within their pricing policies the rational reaction of customers to their price schedules. In the airline or telecommunication industry, this process is all the more complex due to interactions resulting from the structure of the supply network. In this paper, we consider a streamlined version of this situation where a firm's decision variables involve both prices and investments. We model this situation as a joint design and pricing problem that we formulate a… Show more

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Cited by 63 publications
(28 citation statements)
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“…They present and test an algorithmic scheme that can solve toll-setting problems of significant sizes to near optimality, within reasonable computing times. Brotcorne et al (2008) consider the problem of pricing in a network together with the design issue: this situation is realistic where the network design can be changed in the short term together with the pricing, for example, in telecommunications networks.…”
Section: The Pricing Problemmentioning
confidence: 99%
See 1 more Smart Citation
“…They present and test an algorithmic scheme that can solve toll-setting problems of significant sizes to near optimality, within reasonable computing times. Brotcorne et al (2008) consider the problem of pricing in a network together with the design issue: this situation is realistic where the network design can be changed in the short term together with the pricing, for example, in telecommunications networks.…”
Section: The Pricing Problemmentioning
confidence: 99%
“…The followers are users sending flows along cheapest paths joining their respective origins and destinations. Brotcorne et al (2008) propose a bilevel formulation for this problem and discuss its properties. In particular, they show how the capacity constraints (ensuring that positive flows are routed only on open links, and that they respect capacities) present at the lower level can be moved to the upper level without affecting the optimal solution.…”
Section: The Pricing Problemmentioning
confidence: 99%
“…In an extension to this model, [5] formulated a problem where the carrier not only has to set the prices on the arcs over which it has control, but also determined the capacity to be installed on each of the arcs. Along similar lines, [4] modeled a joint network design problem involving multi-commodity flow. In this case at the upper level the leader carrier is concerned with maximizing the profit raised from prices set on a subset of arcs which are also to be determined.…”
Section: Pricing and Equilibrium Modelsmentioning
confidence: 99%
“…As mentioned earlier the price setting problem for a single carrier used in this work is the capacitated version of the price setting problem extensively studied by [3], [4], [5] and [27]. In the above problem and represent the upstream and downstream nodes of arc a.…”
Section: Model Description and Formulationmentioning
confidence: 99%
“…Other bilevel schemes have been considered in [8] and [9] for different transportation problems while numerical convergence conditions have been discussed in [10].…”
Section: Passengers Flows Modelingmentioning
confidence: 99%