When Hotelling meets Vickrey. Service timing and spatial asymmetry in the airline industry

Abstract

This paper analyzes rivalry between transport facilities in a model that includes two sources of horizontal differentiation: geographical space and departure time. We explore how both sources influence facility fees and the price of the service offered by downstream carriers. Travellers' costs include a fare, a transportation cost to the facility and a schedule delay cost, which captures the monetary cost of departing earlier or later than desired. One carrier operates at each facility and schedules a single departure time. The interactions in the facility-carrier model are represented as a sequential three-stage game in fees, times and fares with simultaneous choices at each stage. We find that duopolistic competition leads to an identical departure time across carriers when their operational cost does not vary with the time of day, but generally leads to distinct service times when this cost is time dependent. When a facility possesses a location advantage, it can set a higher fee and its downstream carrier can charge a higher fare. Departure time differentiation allows the facilities and their carrier to compete along an additional differentiation dimension that can reduce or strengthen the advantage in location. By incorporating the downstream carriers into the analysis, we also find that a higher per passenger commercial revenue at one facility induces a lower fee charged by both facilities to their carrier and a lower fare charged by both carriers at their departure facility, while a lower marginal operational cost for one carrier implies a higher fee at its departure facility, a lower fee at the other facility served by the rival carrier and a lower fare at both facilities.

Analyzing Big Social Data for Evaluating Environment-Friendly Tourism in Turkey

“…Our results support the findings of previous literature in the context of green tourism as these factors were located as important drivers of customers satisfaction in the study by (Bauer et al, 1993;D'Alessandro, 2016;De Palma et al, 2018;Kim et al, 2016;Park et al, 2016;Zamparini et al, 2022).…”

“…Beverages and drinks also gained the interest of researchers in the tourism and hospitality businesses (Park et al, 2016;Türker & Süzer, 2022). Timing in terms of services such as check out, dining, and room services is important for tourist satisfaction and has been explored in previous literature (De Palma et al, 2018). Finally, the important role of service quality in the hotel industry has been endorsed in previous literature through empirical outcomes (Fan et al, 2022;Harif et al, 2022;Perramon et al, 2022).…”

Vertical differentiation and airline alliances: The effect of antitrust immunity

“…Although these expressions have a complex intuitive explanation (because f A 1 = f A 3 arises from a corner solution), we observe that both of them increase with market size (H). 26 The equilibrium fares are given by p . 27 More generally, Shaked and Sutton (1983) report the …niteness result: there can be at most a …nite number of …rms with a positive market share in the industry.…”

Complexity Analysis for Price Competition of Agricultural Products with Regional Brands

“…In reality, there is no agricultural business agent which completely adopts or abandons the traditional or modern production techniques, so most of the agricultural agents are located in the arc from point L to point R. It is assumed that there is an atypical ordinary farmer at point A and an atypical professional cooperative in point B, using both of traditional and modern production techniques to cultivate agricultural products with regional brands. e difference of production techniques and product attributes between ordinary farmers and professional cooperatives is reflected in the difference of their location value in the circular market [40][41][42][43].…”